LOS ANGELES, July 2, 2020 /PRNewswire/ --
Highlights
- Korn Ferry reports annual fee revenue of $1,932.7 million, essentially flat year-over-year (2.2% increase on a constant currency).
- Net income attributable to Korn Ferry was $104.9 million in FY'20 with an operating margin of 9.1% and Adjusted EBITDA of $301.0 million and Adjusted EBITDA margin of 15.6%.
- Fee revenue was $440.5 million in Q4 FY'20, a decrease of 10% (7.9% on a constant currency) as compared to Q4 FY'19.
- Net loss attributable to Korn Ferry was $0.8 million in Q4 FY'20, with an operating margin of 5.0%. Adjusted EBITDA was $69.6 million in Q4 FY'20 with an Adjusted EBITDA margin of 15.8%.
- Q4 FY'20 diluted loss per share was $0.02 compared to diluted earnings per share of $0.89 in Q4 FY'19. Adjusted diluted earnings per share was $0.60 in Q4 FY'20 compared to $0.88 in Q4 FY'19.
- The Company ended the year with a strong liquidity position with total cash and cash equivalents and marketable securities of $863 million, and after setting aside amounts for bonus payments and deferred compensation arrangements, investable cash was $532 million.
- The Company repurchased 0.8 million shares, using $24.4 million of cash during the quarter. Further, the Company declared a quarterly dividend of $0.10 per share on July 1, 2020 payable on July 15, 2020 to stockholders of record on July 31, 2020.
Korn Ferry KFY, a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $440.5 million and $1,932.7 million, respectively. In addition, fourth quarter diluted loss per share was $0.02 and adjusted diluted earnings per share was $0.60. Adjusted diluted earnings per share for the fourth quarter excludes an aggregate of $33.5 million, or $0.62 per share, of restructuring charges, net due to the corona virus pandemic ("COVID-19"), and integration/acquisition costs, net of tax due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution ("acquired companies").
"During the fiscal fourth quarter we generated $441 million in fee revenue, down 10% year-over-year (7.9% at constant currency). Operating margin was 5% and Adjusted EBITDA margin was 15.8%," said Gary D. Burnison, CEO, Korn Ferry.
"As we manage our way through COVID-19, our Korn Ferry colleagues are showing their resilience by quickly pivoting to a different way of working – whether it's from home or the rapid transition to the virtual delivery of our services and solutions to clients. I'm confident that our offerings are more relevant now than ever before," Burnison added. "I truly feel that over the next 2 years there will be more change than in the last 10 years. Different work needs to get done, and work needs to get done differently. That's an opportunity for our company. As an organizational consulting firm, Korn Ferry is committed to promoting conscious inclusion – enabling all people and their organizations to exceed their potential – and to exceed potential, people need an abundance of opportunity, development, and sponsorship. Korn Ferry is the right firm at the right time to help organizations drive performance through change, and I have never been more proud of our company."
Selected Financial Results
(dollars in millions, except per share amounts) (a)
Fourth Quarter | Year to Date | |||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | |||||||||||||
Fee revenue | $ | 440.5 | $ | 490.8 | $ | 1,932.7 | $ | 1,926.0 | ||||||||
Total revenue | $ | 449.0 | $ | 502.5 | $ | 1,977.3 | $ | 1,973.9 | ||||||||
Operating income | $ | 22.2 | $ | 62.3 | $ | 176.0 | $ | 140.8 | ||||||||
Operating margin | 5.0% | 12.7% | 9.1% | 7.3% | ||||||||||||
Net (loss) income attributable to Korn Ferry | $ | (0.8) | $ | 50.3 | $ | 104.9 | $ | 102.7 | ||||||||
Basic (loss) earnings per share | $ | (0.02) | $ | 0.90 | $ | 1.91 | $ | 1.84 | ||||||||
Diluted (loss) earnings per share | $ | (0.02) | $ | 0.89 | $ | 1.90 | $ | 1.81 | ||||||||
EBITDA Results (b): | Fourth Quarter | Year to Date | ||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | |||||||||||||
EBITDA | $ | 26.3 | $ | 82.2 | $ | 228.5 | $ | 197.7 | ||||||||
EBITDA margin | 6.0% | 16.7% | 11.8% | 10.3% | ||||||||||||
Adjusted Results (c): | Fourth Quarter | Year to Date | ||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | |||||||||||||
Adjusted EBITDA (b) | $ | 69.6 | $ | 82.2 | $ | 301.0 | $ | 311.0 | ||||||||
Adjusted EBITDA margin (b) | 15.8% | 16.7% | 15.6% | 16.1% | ||||||||||||
Adjusted net income attributable to Korn Ferry | $ | 32.7 | $ | 49.7 | $ | 161.3 | $ | 187.9 | ||||||||
Adjusted basic earnings per share | $ | 0.60 | $ | 0.89 | $ | 2.94 | $ | 3.36 | ||||||||
Adjusted diluted earnings per share | $ | 0.60 | $ | 0.88 | $ | 2.91 | $ | 3.31 | ||||||||
____________________ | ||||||||||||||||
(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 integration/acquisition costs, restructuring charges, net, separation costs and tradename write-offs. 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'20 | FY'19 | FY'20 | FY'19 | |||||||||||||
Integration/acquisition costs | $ | 2.8 | $ | — | $ | 12.2 | $ | 6.7 | ||||||||
Restructuring charges, net | $ | 40.5 | $ | — | $ | 58.6 | $ | — | ||||||||
Separation costs | $ | — | $ | — | $ | 1.8 | $ | — | ||||||||
Tradename write-offs | $ | — | $ | — | $ | — | $ | 106.6 | ||||||||
Debt refinancing costs | $ | — | $ | — | $ | 0.8 | $ | — | ||||||||
Fiscal 2020 Fourth Quarter Results
The Company reported fee revenue in Q4 FY'20 of $440.5 million, a decrease of 10% (decrease of 7.9% on a constant currency basis) compared to Q4 FY'19. The decline in fee revenue was primarily due to the impact of COVID-19 on economies around the world, partially offset by fee revenue generated by the acquired companies in the Digital segment.
Net loss attributable to Korn Ferry was $0.8 million in Q4 FY'20 as compared to net income attributable to Korn Ferry of $50.3 million in Q4 FY'19. The change from net income to a net loss attributable to Korn Ferry was primarily due to a decline in fee revenue and restructuring charges incurred in Q4 FY'20 in reaction to the impact of COVID-19, offset by decreases in compensation and benefits expense and income tax expense.
Operating margin was 5.0% in Q4 FY'20 compared to 12.7% in the year-ago quarter. The decrease in operating margin was primarily due to restructuring charges, net associated with the impact of COVID-19 and the decline in fee revenue in Q4 FY'20.
Adjusted EBITDA margin was 15.8%, compared to 16.7% in the year-ago quarter.
Fiscal 2020 Results
The Company reported fee revenue in FY'20 of $1,932.7 million, essentially flat when compared to FY'19. Although fee revenue was essentially flat, there was a change in mix with an increase in Digital due to fee revenue generated by the acquired companies and an organic increase in RPO and Professional Search, offset by decreases in fee revenue in Executive Search and Consulting.
Net income attributable to Korn Ferry was $104.9 million in FY'20 as compared to $102.7 million in FY'19. The increase in net income attributable to Korn Ferry was primarily due to a decrease in general and administrative expenses (due to trade name write-offs in FY'19), offset by increases in restructuring charges, net and in the Company's effective income tax rate.
Operating income was $176.0 million in FY'20 with an operating margin of 9.1% compared to $140.8 million and 7.3% in FY'19. The increase in operating income was primarily due to decreases in general and administrative expenses (due to trade name write-offs in FY'19) and compensation and benefits expense, partially offset by restructuring charges incurred in FY'20 associated with the impact of COVID-19 and the acquisition of the acquired companies.
Adjusted EBITDA was $301.0 million in FY'20 with Adjusted EBITDA margin of 15.6%, compared to $311.0 million and 16.1%, respectively, in the year-ago period.
Results by Segment
Selected Consulting Data(a)
(dollars in millions) (b)
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Fee revenue | $ | 121.0 | $ | 144.4 | $ | 543.1 | $ | 568.3 | |||||||||||
Total revenue | $ | 123.4 | $ | 148.7 | $ | 557.3 | $ | 585.9 | |||||||||||
Operating (loss) income | $ | (6.6) | $ | 13.3 | $ | 17.7 | $ | (34.1) | |||||||||||
Operating margin | (5.4%) | 9.2% | 3.3% | (6.0%) | |||||||||||||||
Ending number of consultants and execution staff (c) | 1,671 | 1,881 | 1,671 | 1,881 | |||||||||||||||
Hours worked in thousands (d) | 415 | 439 | 1,758 | 1,703 | |||||||||||||||
Average billed rate (e) | $ | 292 | $ | 329 | $ | 309 | $ | 334 | |||||||||||
EBITDA Results (f): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
EBITDA | $ | (2.3) | $ | 18.4 | $ | 36.6 | $ | (15.7) | |||||||||||
EBITDA margin | (1.9%) | 12.7% | 6.7% | (2.8%) | |||||||||||||||
Adjusted Results (g): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Adjusted EBITDA (f) | $ | 11.1 | $ | 18.4 | $ | 61.1 | $ | 66.5 | |||||||||||
Adjusted EBITDA margin (f) | 9.2% | 12.7% | 11.2% | 11.7% | |||||||||||||||
____________________ | |||||||||||||||||||
(a) | In fiscal 2020, the Company changed the composition of its global segments. Consulting segment represents the consulting business that was previously included in the Advisory segment. Segment data for Q4 FY'19 and YTD FY'19 have been recast to reflect the division of the Advisory segment into the Consulting and Digital segments. | ||||||||||||||||||
(b) | Numbers may not total due to rounding. | ||||||||||||||||||
(c) | Represents number of employees originating, delivering and executing consulting services. | ||||||||||||||||||
(d) | Represents the number of hours worked by consultant and execution staff during the period. | ||||||||||||||||||
(e) | Represents the amount of fee revenue divided by the number of hours worked by consultants and executive staff. | ||||||||||||||||||
(f) | EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations). | ||||||||||||||||||
(g) | Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations): | ||||||||||||||||||
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Integration/acquisition costs | $ | — | $ | — | $ | — | $ | 5.3 | |||||||||||
Restructuring charges, net | $ | 13.4 | $ | — | $ | 24.5 | $ | — | |||||||||||
Tradename write-offs | $ | — | $ | — | $ | — | $ | 77.0 | |||||||||||
Reflecting the impact of COVID-19, fee revenue was $121.0 million in Q4 FY'20 compared to $144.4 million in Q4 FY'19, a decrease of $23.4 million or 16% (decrease of 14% on a constant currency basis).
Operating loss was $6.6 million in Q4 FY'20 with an operating margin of (5.4%) compared to operating income of $13.3 million and an operating margin of 9.2%, respectively, in the year-ago quarter. The decrease in operating income was primarily due to restructuring charges, net incurred in Q4 FY'20 associated with the impact of COVID-19 and a decline in fee revenue, partially offset by decreases in compensation and benefits expense, general and administrative expenses and cost of services expense.
Adjusted EBITDA was $11.1 million in Q4 FY'20 with an Adjusted EBITDA margin of 9.2% compared to $18.4 million and 12.7%, respectively, in the year-ago quarter.
Selected Digital Data (a)
(dollars in millions) (b)
Digital is an integrated platform that gives clients direct access to people and organizational data, insights, analytics, and digital assets that when used together, give clients a common language for all talent matters.
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Fee revenue | $ | 69.3 | $ | 62.7 | $ | 292.4 | $ | 252.7 | |||||||||||
Total revenue | $ | 69.9 | $ | 62.7 | $ | 294.3 | $ | 252.7 | |||||||||||
Operating income | $ | 5.9 | $ | 16.7 | $ | 46.9 | $ | 39.7 | |||||||||||
Operating margin | 8.5% | 26.6% | 16.0% | 15.7% | |||||||||||||||
Ending number of consultants | 421 | 350 | 421 | 350 | |||||||||||||||
Subscription & License fee revenue | $ | 20.9 | $ | 14.6 | $ | 73.5 | $ | 57.2 | |||||||||||
EBITDA Results (c): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
EBITDA | $ | 11.9 | $ | 20.6 | $ | 66.7 | $ | 53.6 | |||||||||||
EBITDA margin | 17.2% | 32.8% | 22.8% | 21.2% | |||||||||||||||
Adjusted Results (d): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Adjusted EBITDA (c) | $ | 17.0 | $ | 20.6 | $ | 83.1 | $ | 84.5 | |||||||||||
Adjusted EBITDA margin (c) | 24.5% | 32.8% | 28.4% | 33.4% | |||||||||||||||
____________________ | |||||||||||||||||||
(a) | In the fiscal 2020, the Company changed the composition of its global segments. Digital segment represents the products business that was previously included in the Advisory segment. Segment data for Q4 FY'19 and YTD FY'19 have been recast to reflect the division of the Advisory segment into the Consulting and Digital segments. | ||||||||||||||||||
(b) | Numbers may not total due to rounding. | ||||||||||||||||||
(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 adjust for the following (see attached reconciliations): | ||||||||||||||||||
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Integration/acquisition costs | $ | 1.6 | $ | — | $ | 5.9 | $ | 1.3 | |||||||||||
Restructuring charges, net | $ | 3.4 | $ | — | $ | 10.5 | $ | — | |||||||||||
Tradename write-offs | $ | — | $ | — | $ | — | $ | 29.6 | |||||||||||
Fee revenue was $69.3 million in Q4 FY'20 compared to $62.7 million in Q4 FY'19, an increase of $6.6 million or 11% (14% increase on a constant currency basis). The increase in fee revenue was primarily due to fee revenue generated by the acquired companies.
Operating income was $5.9 million in Q4 FY'20 with an operating margin of 8.5% compared to $16.7 million and an operating margin of 26.6% in the year-ago quarter. The decrease in operating income was due to an increase in operating expenses associated with the acquisition of the acquired companies in addition to restructuring charges, net incurred in Q4 FY'20 associated with the impact of COVID-19, partially offset by higher fee revenue.
Adjusted EBITDA was $17.0 million in Q4 FY'20 with an Adjusted EBITDA margin of 24.5% compared to $20.6 million and 32.8%, respectively, in the year-ago quarter.
Selected Executive Search Data
(dollars in millions) (a)
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Fee revenue | $ | 167.9 | $ | 190.9 | $ | 732.5 | $ | 774.8 | |||||||||||
Total revenue | $ | 171.2 | $ | 195.3 | $ | 749.2 | $ | 793.4 | |||||||||||
Operating income | $ | 37.4 | $ | 42.0 | $ | 156.9 | $ | 179.1 | |||||||||||
Operating margin | 22.3% | 22.0% | 21.4% | 23.1% | |||||||||||||||
Ending number of consultants | 556 | 565 | 556 | 565 | |||||||||||||||
Average number of consultants | 569 | 558 | 560 | 553 | |||||||||||||||
Engagements billed | 3,424 | 3,943 | 9,722 | 10,318 | |||||||||||||||
New engagements (b) | 1,229 | 1,717 | 6,064 | 6,790 | |||||||||||||||
EBITDA Results (c): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
EBITDA | $ | 29.9 | $ | 49.7 | $ | 161.7 | $ | 193.8 | |||||||||||
EBITDA margin | 17.8% | 26.0% | 22.1% | 25.0% | |||||||||||||||
Adjusted Results (d): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Adjusted EBITDA (c) | $ | 47.5 | $ | 49.7 | $ | 181.1 | $ | 193.8 | |||||||||||
Adjusted EBITDA margin (c) | 28.3% | 26.0% | 24.7% | 25.0% | |||||||||||||||
____________________ | |||||||||||||||||||
(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 adjust for the following (see attached reconciliations): | ||||||||||||||||||
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Restructuring charges, net | $ | 17.5 | $ | — | $ | 17.5 | $ | — | |||||||||||
Separation costs | $ | — | $ | — | $ | 1.8 | $ | — | |||||||||||
Fee revenue was $167.9 million and $190.9 million in Q4 FY'20 and Q4 FY'19, respectively, a decrease of $23.0 million or 12% (decrease of 10% on a constant currency basis). The decrease in fee revenue was attributable to a decline in fee revenue in all regions due to the decrease in demand for our products and services as a result of the worldwide economic downturn associated with COVID-19.
Operating income was $37.4 million in Q4 FY'20 compared to $42.0 million in Q4 FY'19. Operating margin was 22.3% in Q4 FY'20 compared to 22.0% in the year-ago quarter. The decrease in operating income was mainly due to a decrease in fee revenue and restructuring charges, net incurred in Q4 FY'20 associated with the impact of COVID-19, partially offset by decreases in compensation and benefits expense (due to lower performance related bonus expense and a decrease in expenses associated with our deferred compensation and retirement plans) and general and administrative expenses in Q4 FY'20 compared to the year-ago quarter.
Adjusted EBITDA was $47.5 million in Q4 FY'20 with an Adjusted EBITDA margin of 28.3% compared to $49.7 million and 26.0%, respectively, in the year-ago quarter.
Selected RPO and Professional Search Data
(dollars in millions) (a)
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Fee revenue | $ | 82.4 | $ | 92.8 | $ | 364.8 | $ | 330.1 | |||||||||||
Total revenue | $ | 84.5 | $ | 95.8 | $ | 376.6 | $ | 341.9 | |||||||||||
Operating income | $ | 6.2 | $ | 14.5 | $ | 50.4 | $ | 50.9 | |||||||||||
Operating margin | 7.5% | 15.7% | 13.8% | 15.4% | |||||||||||||||
Engagements billed (b) | 1,206 | 1,409 | 3,641 | 3,595 | |||||||||||||||
New engagements (c) | 573 | 781 | 2,744 | 2,935 | |||||||||||||||
EBITDA Results (d): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
EBITDA | $ | 7.0 | $ | 15.6 | $ | 54.4 | $ | 54.4 | |||||||||||
EBITDA margin | 8.5% | 16.9% | 14.9% | 16.5% | |||||||||||||||
Adjusted Results (e): | Fourth Quarter | Year to Date | |||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Adjusted EBITDA (d) | $ | 12.7 | $ | 15.6 | $ | 60.2 | $ | 54.4 | |||||||||||
Adjusted EBITDA margin (d) | 15.4% | 16.9% | 16.5% | 16.5% | |||||||||||||||
____________________ | |||||||||||||||||||
(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). | ||||||||||||||||||
(e) | Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations): | ||||||||||||||||||
Fourth Quarter | Year to Date | ||||||||||||||||||
FY'20 | FY'19 | FY'20 | FY'19 | ||||||||||||||||
Restructuring charges, net | $ | 5.7 | $ | — | $ | 5.7 | $ | — | |||||||||||
Fee revenue was $82.4 million in Q4 FY'20, a decrease of $10.4 million or 11% (decrease of 9% on a constant currency basis), compared to the year-ago quarter. The lower fee revenue resulted from the impact of COVID-19 and was driven by a decrease in fee revenue in recruitment process outsourcing and professional search of $6.2 million and $4.2 million, respectively, in Q4 FY'20 compared to Q4 FY'19.
Operating income was $6.2 million in Q4 FY'20, a decrease of $8.3 million compared to Q4 FY'19 operating income of $14.5 million. Operating margin was 7.5% in Q4 FY'20 compared to 15.7% in the year-ago quarter. The decrease in operating income was due to lower fee revenue in Q4 FY'20 compared to Q4 FY'19 and restructuring charges, net incurred in Q4 FY'20 associated with the impact of COVID-19. This was partially offset by a decrease in compensation and benefits expense due to lower performance related bonus expense, offset by an increase in salaries and related payroll taxes driven by an 8% increase in average headcount during the quarter.
Adjusted EBITDA was $12.7 million during Q4 FY'20, a decrease of $2.9 million compared to Q4 FY'19. Adjusted EBITDA margin was 15.4% in Q4 FY'20 and 16.9% in Q4 FY'19.
Outlook
Although COVID-19 has been with us for a number of months, significant uncertainty about its ultimate impact on society and the global economic environment remains. The pandemic has spread across the globe, infecting different parts of the world at varying points in time and with varying levels of intensity. The response, out of necessity, has been conducted in large part at a very local level, with societies and economies closing and reopening at different points in time and in different ways. Further, the pandemic has had a profound and unprecedented impact on traditional behavior and societal norms. Governments and companies have mandated never before seen rules regarding working from home, social distancing, and workplace safety, and have severely restricted travel and in-person interaction.
As the world begins to slowly and sporadically reopen, we are seeing a resurgence of COVID-19 cases in a number of geographies. The extent to which measures taken are reinstated and new and incremental measures are put in place, and the manner in which authoritative bodies continue to respond, remains a major unknown. While our clients and colleagues are demonstrating real resiliency as they find new and different ways of working together (including the adoption of virtual delivery of our services and solutions), the unprecedented nature of what we are currently experiencing, combined with conflicting and ever-changing datapoints, continues to cloud the near-term predictability of our business. Consequently, and consistent with our approach to the fourth quarter of FY'20, we will not issue any specific revenue or earnings guidance for the first quarter of FY'21. We plan to reassess the suspension of our guidance once we are comfortable that the coronavirus uncertainties have largely passed.
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 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 as well as the expected benefits of the acquisition of the acquired companies (as defined below, the timing and expected benefits of our recently adopted restructuring plan and 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. 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 the magnitude and duration of the negative impact of the COVID-19 outbreak 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, 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 companies, including those of Miller Heiman Group, AchieveForum, and Strategy Execution (collectively, the "acquired companies"); the ability to recognize the anticipated benefits of the acquisition of the acquired companies; the costs related to the acquisition of the acquired companies 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, adjusted to exclude integration/acquisition costs, restructuring charges, separation costs, tradename write-offs, and debt refinancing costs, net of income tax effect;
- Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, restructuring charges, separation costs, tradename write-offs, and debt refinancing costs, 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;
- EBITDA, or earnings before interest, taxes, depreciation and amortization and EBITDA margin;
- Adjusted EBITDA, which is EBITDA further adjusted to exclude integration/acquisition costs, restructuring charges, separation costs and tradename write-offs and Adjusted EBITDA margin; and
- Investable cash represents the amount of funds available to the Company after taking into consideration the accrued bonus that will be paid and the amount set aside for deferred compensation.
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, 2) charges we incurred to restructure the Company as a result of COVID-19 and due to acquisition of the acquired companies, 3) separation costs, 4) tradename write-offs associated with the rebranding plan initiated by Korn Ferry and 5) debt refinancing costs. 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. Investable cash provides useful information surrounding the Company's liquidity position since it is the amount of funds the Company has available to fund its operations after taking into account accrued bonuses that will be paid and the amount set aside for payments on deferred compensation plans. 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 | ||||||||||||
Three Months Ended | Year Ended | |||||||||||
April 30, | April 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
(unaudited) | ||||||||||||
Fee revenue | $ | 440,469 | $ | 490,756 | $ | 1,932,732 | $ | 1,926,033 | ||||
Reimbursed out-of-pocket engagement expenses | 8,507 | 11,779 | 44,598 | 47,829 | ||||||||
Total revenue | 448,976 | 502,535 | 1,977,330 | 1,973,862 | ||||||||
Compensation and benefits | 283,519 | 331,665 | 1,297,994 | 1,311,240 | ||||||||
General and administrative expenses | 59,786 | 64,350 | 258,957 | 351,991 | ||||||||
Reimbursed expenses | 8,507 | 11,779 | 44,598 | 47,829 | ||||||||
Cost of services | 19,515 | 20,467 | 85,886 | 75,487 | ||||||||
Depreciation and amortization | 14,956 | 11,999 | 55,311 | 46,489 | ||||||||
Restructuring charges, net | 40,466 | - | 58,559 | - | ||||||||
Total operating expenses | 426,749 | 440,260 | 1,801,305 | 1,833,036 | ||||||||
Operating income | 22,227 | 62,275 | 176,025 | 140,826 | ||||||||
Other (loss) income, net | (10,893) | 7,922 | (2,879) | 10,405 | ||||||||
Interest expense, net | (6,998) | (4,169) | (22,184) | (16,891) | ||||||||
Income before provision for income taxes | 4,336 | 66,028 | 150,962 | 134,340 | ||||||||
Income tax provision | 4,957 | 15,401 | 43,945 | 29,544 | ||||||||
Net (loss) income | (621) | 50,627 | 107,017 | 104,796 | ||||||||
Net income attributable to noncontrolling interest | (181) | (363) | (2,071) | (2,145) | ||||||||
Net (loss) income attributable to Korn Ferry | $ | (802) | $ | 50,264 | $ | 104,946 | $ | 102,651 | ||||
(Loss) earnings per common share attributable to Korn Ferry: | ||||||||||||
Basic | $ | (0.02) | $ | 0.90 | $ | 1.91 | $ | 1.84 | ||||
Diluted | $ | (0.02) | $ | 0.89 | $ | 1.90 | $ | 1.81 | ||||
Weighted-average common shares outstanding: | ||||||||||||
Basic | 53,534 | 55,173 | 54,342 | 55,311 | ||||||||
Diluted | 53,534 | 55,666 | 54,767 | 56,096 | ||||||||
Cash dividends declared per share: | $ | 0.10 | $ | 0.10 | $ | 0.40 | $ | 0.40 | ||||
KORN FERRY AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
Three Months Ended April 30, | Year Ended April 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||||||||||
Fee revenue: | ||||||||||||||||||||||||||||||||
Consulting | $ | 120,992 | $ | 144,363 | (16.2%) | $ | 543,095 | $ | 568,321 | (4.4%) | ||||||||||||||||||||||
Digital | 69,269 | 62,719 | 10.4% | 292,366 | 252,727 | 15.7% | ||||||||||||||||||||||||||
Executive Search: | ||||||||||||||||||||||||||||||||
North America | 102,196 | 113,651 | (10.1%) | 434,624 | 455,826 | (4.7%) | ||||||||||||||||||||||||||
EMEA | 39,662 | 45,307 | (12.5%) | 170,314 | 182,829 | (6.8%) | ||||||||||||||||||||||||||
Asia Pacific | 19,737 | 24,373 | (19.0%) | 98,132 | 104,291 | (5.9%) | ||||||||||||||||||||||||||
Latin America | 6,260 | 7,557 | (17.2%) | 29,400 | 31,896 | (7.8%) | ||||||||||||||||||||||||||
Total Executive Search | 167,855 | 190,888 | (12.1%) | 732,470 | 774,842 | (5.5%) | ||||||||||||||||||||||||||
RPO and Professional Search | 82,353 | 92,786 | (11.2%) | 364,801 | 330,143 | 10.5% | ||||||||||||||||||||||||||
Total fee revenue | 440,469 | 490,756 | (10.2%) | 1,932,732 | 1,926,033 | 0.3% | ||||||||||||||||||||||||||
Reimbursed out-of-pocket engagement expenses | 8,507 | 11,779 | (27.8%) | 44,598 | 47,829 | (6.8%) | ||||||||||||||||||||||||||
Total revenue | $ | 448,976 | $ | 502,535 | (10.7%) | $ | 1,977,330 | $ | 1,973,862 | 0.2% | ||||||||||||||||||||||
Operating (loss) income: | Margin | Margin | Margin | Margin | ||||||||||||||||||||||||||||
Consulting | $ | (6,577) | (5.4%) | $ | 13,316 | 9.2% | $ | 17,695 | 3.3% | $ | (34,115) | (6.0%) | ||||||||||||||||||||
Digital | 5,873 | 8.5% | 16,675 | 26.6% | 46,909 | 16.0% | 39,732 | 15.7% | ||||||||||||||||||||||||
Executive Search: | ||||||||||||||||||||||||||||||||
North America | 32,826 | 32.1% | 28,316 | 24.9% | 113,080 | 26.0% | 120,754 | 26.5% | ||||||||||||||||||||||||
EMEA | 2,619 | 6.6% | 8,161 | 18.0% | 21,085 | 12.4% | 29,974 | 16.4% | ||||||||||||||||||||||||
Asia Pacific | 48 | 0.2% | 5,027 | 20.6% | 17,914 | 18.3% | 24,364 | 23.4% | ||||||||||||||||||||||||
Latin America | 1,861 | 29.7% | 538 | 7.1% | 4,860 | 16.5% | 3,998 | 12.5% | ||||||||||||||||||||||||
Total Executive Search | 37,354 | 22.3% | 42,042 | 22.0% | 156,939 | 21.4% | 179,090 | 23.1% | ||||||||||||||||||||||||
RPO and Professional Search | 6,159 | 7.5% | 14,547 | 15.7% | 50,438 | 13.8% | 50,884 | 15.4% | ||||||||||||||||||||||||
Corporate | (20,582) | (24,305) | (95,956) | (94,765) | ||||||||||||||||||||||||||||
Total operating income | $ | 22,227 | 5.0% | $ | 62,275 | 12.7% | $ | 176,025 | 9.1% | $ | 140,826 | 7.3% | ||||||||||||||||||||
KORN FERRY AND SUBSIDIARIES | |||||||
April 30, | April 30, | ||||||
2020 | 2019 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 689,244 | $ | 626,360 | |||
Marketable securities | 41,951 | 8,288 | |||||
Receivables due from clients, net of allowance for doubtful accounts of $23,795 and $21,582 at April 30, 2020 and 2019, respectively | 397,165 | 404,857 | |||||
Income taxes and other receivables | 38,755 | 26,767 | |||||
Unearned compensation | 43,117 | 42,003 | |||||
Prepaid expenses and other assets | 26,851 | 28,535 | |||||
Total current assets | 1,237,083 | 1,136,810 | |||||
Marketable securities, non-current | 132,134 | 132,463 | |||||
Property and equipment, net | 142,728 | 131,505 | |||||
Operating lease right-of-use assets, net | 195,077 | - | |||||
Cash surrender value of company-owned life insurance policies, net of loans | 146,408 | 126,000 | |||||
Deferred income taxes | 55,479 | 43,220 | |||||
Goodwill | 613,943 | 578,298 | |||||
Intangible assets, net | 111,926 | 82,948 | |||||
Unearned compensation, non-current | 79,510 | 80,924 | |||||
Investments and other assets | 29,540 | 22,684 | |||||
Total assets | $ | 2,743,828 | $ | 2,334,852 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Accounts payable | $ | 45,684 | $ | 39,156 | |||
Income taxes payable | 21,158 | 21,145 | |||||
Compensation and benefits payable | 280,911 | 328,610 | |||||
Operating lease liability, current | 54,851 | - | |||||
Other accrued liabilities | 221,603 | 162,047 | |||||
Total current liabilities | 624,207 | 550,958 | |||||
Deferred compensation and other retirement plans | 289,136 | 257,635 | |||||
Operating lease liability, non-current | 180,766 | - | |||||
Long-term debt | 394,144 | 222,878 | |||||
Deferred tax liabilities | 1,056 | 1,103 | |||||
Other liabilities | 30,828 | 58,891 | |||||
Total liabilities | 1,520,137 | 1,091,465 | |||||
Stockholders' equity | |||||||
Common stock: $0.01 par value, 150,000 shares authorized, 73,205 and 72,442 shares issued and 54,450 and 56,431 shares outstanding at April 30, 2020 and 2019, respectively | 585,560 | 656,463 | |||||
Retained earnings | 742,993 | 660,845 | |||||
Accumulated other comprehensive loss, net | (107,172) | (76,652) | |||||
Total Korn Ferry stockholders' equity | 1,221,381 | 1,240,656 | |||||
Noncontrolling interest | 2,310 | 2,731 | |||||
Total stockholders' equity | 1,223,691 | 1,243,387 | |||||
Total liabilities and stockholders' equity | $ | 2,743,828 | $ | 2,334,852 | |||
KORN FERRY AND SUBSIDIARIES | |||||||||||
Three Months Ended | Year Ended | ||||||||||
April 30, | April 30, | ||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||
(unaudited) | |||||||||||
Net (loss) income attributable to Korn Ferry | $ | (802) | $ | 50,264 | $ | 104,946 | $ | 102,651 | |||
Net income attributable to non-controlling interest | 181 | 363 | 2,071 | 2,145 | |||||||
Net (loss) income | (621) | 50,627 | 107,017 | 104,796 | |||||||
Income tax provision | 4,957 | 15,401 | 43,945 | 29,544 | |||||||
Income before provision for income taxes | 4,336 | 66,028 | 150,962 | 134,340 | |||||||
Other loss (income), net | 10,893 | (7,922) | 2,879 | (10,405) | |||||||
Interest expense, net | 6,998 | 4,169 | 22,184 | 16,891 | |||||||
Operating income | 22,227 | 62,275 | 176,025 | 140,826 | |||||||
Depreciation and amortization | 14,956 | 11,999 | 55,311 | 46,489 | |||||||
Other (loss) income, net | (10,893) | 7,922 | (2,879) | 10,405 | |||||||
EBITDA | 26,290 | 82,196 | 228,457 | 197,720 | |||||||
Integration/acquisition costs (1) | 2,833 | - | 12,152 | 6,746 | |||||||
Restructuring charges, net (2) | 40,466 | - | 58,559 | - | |||||||
Separation costs (3) | - | - | 1,783 | - | |||||||
Tradename write-offs (4) | - | - | - | 106,555 | |||||||
Adjusted EBITDA | $ | 69,589 | $ | 82,196 | $ | 300,951 | $ | 311,021 | |||
Operating margin | 5.0% | 12.7% | 9.1% | 7.3% | |||||||
Depreciation and amortization | 3.4% | 2.4% | 2.8% | 2.4% | |||||||
Other (loss) income, net | (2.4%) | 1.6% | (0.1%) | 0.6% | |||||||
EBITDA margin | 6.0% | 16.7% | 11.8% | 10.3% | |||||||
Integration/acquisition costs (1) | 0.6% | - | 0.7% | 0.4% | |||||||
Restructuring charges, net (2) | 9.2% | - | 3.0% | - | |||||||
Separation costs (3) | - | - | 0.1% | - | |||||||
Tradename write-offs (4) | - | - | - | 5.4% | |||||||
Adjusted EBITDA margin | 15.8% | 16.7% | 15.6% | 16.1% | |||||||
Net (loss) income attributable to Korn Ferry | $ | (802) | $ | 50,264 | $ | 104,946 | $ | 102,651 | |||
Integration/acquisition costs (1) | 2,833 | - | 12,152 | 6,746 | |||||||
Restructuring charges, net (2) | 40,466 | - | 58,559 | - | |||||||
Separation costs (3) | - | - | 1,783 | - | |||||||
Tradename write-offs (4) | - | - | - | 106,555 | |||||||
Debt refinancing costs (5) | - | - | 828 | - | |||||||
Tax effect on the adjusted items (6) | (9,819) | (598) | (16,938) | (28,094) | |||||||
Adjusted net income attributable to Korn Ferry | $ | 32,678 | $ | 49,666 | $ | 161,330 | $ | 187,858 | |||
Basic (loss) earnings per common share | $ | (0.02) | $ | 0.90 | $ | 1.91 | $ | 1.84 | |||
Integration/acquisition costs (1) | 0.05 | - | 0.22 | 0.12 | |||||||
Restructuring charges, net (2) | 0.75 | - | 1.07 | - | |||||||
Separation costs (3) | - | - | 0.03 | - | |||||||
Tradename write-offs (4) | - | - | - | 1.93 | |||||||
Debt refinancing costs (5) | - | - | 0.02 | - | |||||||
Tax effect on the adjusted items (6) | (0.18) | (0.01) | (0.31) | (0.53) | |||||||
Adjusted basic earnings per share | $ | 0.60 | $ | 0.89 | $ | 2.94 | $ | 3.36 | |||
Diluted (loss) earnings per common share | $ | (0.02) | $ | 0.89 | $ | 1.90 | $ | 1.81 | |||
Integration/acquisition costs (1) | 0.05 | - | 0.22 | 0.12 | |||||||
Restructuring charges, net (2) | 0.75 | - | 1.06 | - | |||||||
Separation costs (3) | - | - | 0.03 | - | |||||||
Tradename write-offs (4) | - | - | - | 1.88 | |||||||
Debt refinancing costs (5) | - | - | 0.01 | - | |||||||
Tax effect on the adjusted items (6) | (0.18) | (0.01) | (0.31) | (0.50) | |||||||
Adjusted diluted earnings per share | $ | 0.60 | $ | 0.88 | $ | 2.91 | $ | 3.31 | |||
Explanation of Non-GAAP Adjustments | |||||||
(1) | Costs associated with current and previous acquisitions, 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 as a result of COVID-19 and due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution on November 1, 2019. | ||||||
(3) | Costs associated with certain senior management separation charges. | ||||||
(4) | 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 and 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. | ||||||
(5) | Costs to write-off debt issuance costs and interest rate swap as a result of replacing our prior Credit Agreement with a new senior secured Credit Agreement. | ||||||
(6) | Tax effect on integration/acquisition costs, restructuring charges, net, separation costs, tradename write-offs and write-off of debt issuance cost. | ||||||
KORN FERRY AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||
. | Three Months Ended April 30, 2020 | ||||||||||||||||||||||||||||||||||||
Executive Search | |||||||||||||||||||||||||||||||||||||
Consulting | Digital | North America | EMEA | Asia Pacific | Latin America | Subtotal | RPO and Professional Search | Corporate | Consolidated | ||||||||||||||||||||||||||||
Fee revenue | $ | 120,992 | $ | 69,269 | $ | 102,196 | $ | 39,662 | $ | 19,737 | $ | 6,260 | $ | 167,855 | $ | 82,353 | $ | - | $ | 440,469 | |||||||||||||||||
Total revenue | $ | 123,423 | $ | 69,890 | $ | 104,775 | $ | 40,148 | $ | 20,008 | $ | 6,282 | $ | 171,213 | $ | 84,450 | $ | - | $ | 448,976 | |||||||||||||||||
Net loss attributable to Korn Ferry | $ | (802) | |||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 181 | ||||||||||||||||||||||||||||||||||||
Other loss net | 10,893 | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 6,998 | ||||||||||||||||||||||||||||||||||||
Income tax provision | 4,957 | ||||||||||||||||||||||||||||||||||||
Operating (loss) income | $ | (6,577) | $ | 5,873 | $ | 32,826 | $ | 2,619 | $ | 48 | $ | 1,861 | $ | 37,354 | $ | 6,159 | $ | (20,582) | 22,227 | ||||||||||||||||||
Depreciation and amortization | 4,379 | 6,105 | 835 | 385 | 307 | 244 | 1,771 | 945 | 1,756 | 14,956 | |||||||||||||||||||||||||||
Other loss, net | (143) | (43) | (8,791) | (9) | (182) | (198) | (9,180) | (134) | (1,393) | (10,893) | |||||||||||||||||||||||||||
EBITDA | (2,341) | 11,935 | 24,870 | 2,995 | 173 | 1,907 | 29,945 | 6,970 | (20,219) | 26,290 | |||||||||||||||||||||||||||
EBITDA margin | (1.9%) | 17.2% | 24.3% | 7.6% | 0.9% | 30.5% | 17.8% | 8.5% | 6.0% | ||||||||||||||||||||||||||||
Integration/acquisition costs | - | 1,605 | - | - | - | - | - | - | 1,228 | 2,833 | |||||||||||||||||||||||||||
Restructuring, charges, net | 13,443 | 3,449 | 7,244 | 6,347 | 3,649 | 309 | 17,549 | 5,742 | 283 | 40,466 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 11,102 | $ | 16,989 | $ | 32,114 | $ | 9,342 | $ | 3,822 | $ | 2,216 | $ | 47,494 | $ | 12,712 | $ | (18,708) | $ | 69,589 | |||||||||||||||||
Adjusted EBITDA margin | 9.2% | 24.5% | 31.4% | 23.6% | 19.4% | 35.4% | 28.3% | 15.4% | 15.8% | ||||||||||||||||||||||||||||
Three Months Ended April 30, 2019 | |||||||||||||||||||||||||||||||||||||
Executive Search | |||||||||||||||||||||||||||||||||||||
Consulting | Digital | North America | EMEA | Asia Pacific | Latin America | Subtotal | RPO and Professional Search | Corporate | Consolidated | ||||||||||||||||||||||||||||
Fee revenue | $ | 144,363 | $ | 62,719 | $ | 113,651 | $ | 45,307 | $ | 24,373 | $ | 7,557 | $ | 190,888 | $ | 92,786 | $ | - | $ | 490,756 | |||||||||||||||||
Total revenue | $ | 148,658 | $ | 62,719 | $ | 116,939 | $ | 46,107 | $ | 24,726 | $ | 7,572 | $ | 195,344 | $ | 95,814 | $ | - | $ | 502,535 | |||||||||||||||||
Net income attributable to Korn Ferry | $ | 50,264 | |||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 363 | ||||||||||||||||||||||||||||||||||||
Other income, net | (7,922) | ||||||||||||||||||||||||||||||||||||
Interest expense, net | 4,169 | ||||||||||||||||||||||||||||||||||||
Income tax provision | 15,401 | ||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 13,316 | $ | 16,675 | $ | 28,316 | $ | 8,161 | $ | 5,027 | $ | 538 | $ | 42,042 | $ | 14,547 | $ | (24,305) | 62,275 | ||||||||||||||||||
Depreciation and amortization | 3,953 | 3,402 | 973 | 387 | 345 | 105 | 1,810 | 930 | 1,904 | 11,999 | |||||||||||||||||||||||||||
Other income, net | 1,096 | 481 | 5,553 | 44 | 163 | 59 | 5,819 | 165 | 361 | 7,922 | |||||||||||||||||||||||||||
EBITDA and Adjusted EBITDA | $ | 18,365 | $ | 20,558 | $ | 34,842 | $ | 8,592 | $ | 5,535 | $ | 702 | $ | 49,671 | $ | 15,642 | $ | (22,040) | $ | 82,196 | |||||||||||||||||
EBITDA and Adjusted EBITDA margin | 12.7% | 32.8% | 30.7% | 19.0% | 22.7% | 9.3% | 26.0% | 16.9% | 16.7% | ||||||||||||||||||||||||||||
KORN FERRY AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||
Year Ended April 30, 2020 | |||||||||||||||||||||||||||||||||||||||
Executive Search | |||||||||||||||||||||||||||||||||||||||
Consulting | Digital | North America | EMEA | Asia Pacific | Latin America | Subtotal | RPO and Professional Search | Corporate | Consolidated | ||||||||||||||||||||||||||||||
Fee revenue | $ | 543,095 | $ | 292,366 | $ | 434,624 | $ | 170,314 | $ | 98,132 | $ | 29,400 | $ | 732,470 | $ | 364,801 | $ | - | $ | 1,932,732 | |||||||||||||||||||
Total revenue | $ | 557,255 | $ | 294,261 | $ | 447,528 | $ | 172,978 | $ | 99,209 | $ | 29,493 | $ | 749,208 | $ | 376,606 | $ | - | $ | 1,977,330 | |||||||||||||||||||
Net income attributable to Korn Ferry | $ | 104,946 | |||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 2,071 | ||||||||||||||||||||||||||||||||||||||
Other loss, net | 2,879 | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 22,184 | ||||||||||||||||||||||||||||||||||||||
Income tax provision | 43,945 | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | $ | 17,695 | $ | 46,909 | $ | 113,080 | $ | 21,085 | $ | 17,914 | $ | 4,860 | $ | 156,939 | $ | 50,438 | $ | (95,956) | 176,025 | ||||||||||||||||||||
Depreciation and amortization | 17,567 | 19,261 | 3,452 | 1,713 | 1,311 | 1,182 | 7,658 | 3,906 | 6,919 | 55,311 | |||||||||||||||||||||||||||||
Other income (loss), net | 1,326 | 485 | (3,051) | 139 | 11 | 51 | (2,850) | 82 | (1,922) | (2,879) | |||||||||||||||||||||||||||||
EBITDA | 36,588 | 66,655 | 113,481 | 22,937 | 19,236 | 6,093 | 161,747 | 54,426 | (90,959) | 228,457 | |||||||||||||||||||||||||||||
EBITDA margin | 6.7% | 22.8% | 26.1% | 13.5% | 19.6% | 20.7% | 22.1% | 14.9% | 11.8% | ||||||||||||||||||||||||||||||
Integration/acquisition costs | - | 5,937 | - | - | - | - | - | - | 6,215 | 12,152 | |||||||||||||||||||||||||||||
Restructuring charges, net | 24,504 | 10,481 | 7,244 | 6,347 | 3,649 | 309 | 17,549 | 5,742 | 283 | 58,559 | |||||||||||||||||||||||||||||
Separation costs | - | - | - | 1,783 | - | - | 1,783 | - | - | 1,783 | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 61,092 | $ | 83,073 | $ | 120,725 | $ | 31,067 | $ | 22,885 | $ | 6,402 | $ | 181,079 | $ | 60,168 | $ | (84,461) | $ | 300,951 | |||||||||||||||||||
Adjusted EBITDA margin | 11.2% | 28.4% | 27.8% | 18.2% | 23.3% | 21.8% | 24.7% | 16.5% | 15.6% | ||||||||||||||||||||||||||||||
Year Ended April 30, 2019 | |||||||||||||||||||||||||||||||||||||||
Executive Search | |||||||||||||||||||||||||||||||||||||||
Consulting | Digital | North America | EMEA | Asia Pacific | Latin America | Subtotal | RPO and Professional Search | Corporate | Consolidated | ||||||||||||||||||||||||||||||
Fee revenue | $ | 568,321 | $ | 252,727 | $ | 455,826 | $ | 182,829 | $ | 104,291 | $ | 31,896 | $ | 774,842 | $ | 330,143 | $ | - | $ | 1,926,033 | |||||||||||||||||||
Total revenue | $ | 585,893 | $ | 252,727 | $ | 469,743 | $ | 186,131 | $ | 105,543 | $ | 31,960 | $ | 793,377 | $ | 341,865 | $ | - | $ | 1,973,862 | |||||||||||||||||||
Net income attributable to Korn Ferry | $ | 102,651 | |||||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interest | 2,145 | ||||||||||||||||||||||||||||||||||||||
Other income, net | (10,405) | ||||||||||||||||||||||||||||||||||||||
Interest expense, net | 16,891 | ||||||||||||||||||||||||||||||||||||||
Income tax provision | 29,544 | ||||||||||||||||||||||||||||||||||||||
Operating (loss) income | $ | (34,115) | $ | 39,732 | $ | 120,754 | $ | 29,974 | $ | 24,364 | $ | 3,998 | $ | 179,090 | $ | 50,884 | $ | (94,765) | 140,826 | ||||||||||||||||||||
Depreciation and amortization | 16,172 | 12,885 | 3,890 | 1,254 | 1,428 | 410 | 6,982 | 3,255 | 7,195 | 46,489 | |||||||||||||||||||||||||||||
Other income (loss), net | 2,203 | 995 | 6,699 | 432 | 281 | 322 | 7,734 | 268 | (795) | 10,405 | |||||||||||||||||||||||||||||
EBITDA | (15,740) | 53,612 | 131,343 | 31,660 | 26,073 | 4,730 | 193,806 | 54,407 | (88,365) | 197,720 | |||||||||||||||||||||||||||||
EBITDA margin | (2.8%) | 21.2% | 28.8% | 17.3% | 25.0% | 14.8% | 25.0% | 16.5% | 10.3% | ||||||||||||||||||||||||||||||
Integration/acquisition costs | 5,304 | 1,255 | - | - | - | - | - | - | 187 | 6,746 | |||||||||||||||||||||||||||||
Tradename write-offs | 76,967 | 29,588 | - | - | - | - | - | - | - | 106,555 | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 66,531 | $ | 84,455 | $ | 131,343 | $ | 31,660 | $ | 26,073 | $ | 4,730 | $ | 193,806 | $ | 54,407 | $ | (88,178) | $ | 311,021 | |||||||||||||||||||
Adjusted EBITDA margin | 11.7% | 33.4% | 28.8% | 17.3% | 25.0% | 14.8% | 25.0% | 16.5% | 16.1% | ||||||||||||||||||||||||||||||
KORN FERRY AND SUBSIDIARIES | ||||||
April 30, | ||||||
2020 | ||||||
Cash and cash equivalents | $ | 689,244 | ||||
add: | ||||||
Marketable securities | 174,085 | |||||
less: | ||||||
Bonus liability | 189,976 | |||||
Deferred compensation | 141,412 | |||||
Investable cash | $ | 531,941 | ||||
View original content:http://www.prnewswire.com/news-releases/korn-ferry-announces-fourth-quarter-and-fiscal-2020-results-of-operations-301087458.html
SOURCE Korn Ferry
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