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OFFON

KORN FERRY

(KFY)
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Korn Ferry : Announces Fourth Quarter and Fiscal 2021 Results of Operations (Form 8-K)

06/22/2021 | 06:53am EDT

Korn Ferry Announces Fourth Quarter and Fiscal 2021

Results of Operations

Highlights

Korn Ferry reports record fee revenue of $555.2 million in Q4 FY'21, an increase of 26% from Q4 FY'20 and a sequential increase of 17% from Q3 FY'21.

Record net income attributable to Korn Ferry and adjusted diluted earnings per share of $66.2 million and $1.21 in Q4 FY'21, respectively.

Operating income and Adjusted EBITDA were both all-time highs in Q4 FY'21 at $86.3 million (operating margin of 15.5%) and $112.8 million (Adjusted EBITDA margin of 20.3%), respectively.

Declared a quarterly dividend of $0.12 per share on June 21, 2021, a 20% increase in the quarterly dividend, which is payable on July 30, 2021 to stockholders of record on July 6, 2021.

Los Angeles, CA, June 22, 2021 - Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $555.2 million and $1,810.0 million, respectively. In addition, fourth quarter diluted earnings per share and adjusted diluted earnings per share were $1.21, both are all-time highs.

'During the fiscal fourth quarter we generated $555 million in fee revenue, an all-time record, up 26% year-over-year. Our profitably was very strong, with earnings per share of $1.21, an all-time high and Adjusted EBITDA margin at 20.3%.' said Gary D. Burnison, CEO, Korn Ferry.

'I am extremely proud of our company and our accomplishments as we navigate through COVID-19. The diversity and relevance of our offerings and our ability to adapt to delivering our consulting services in a virtual world have helped companies achieve their organizational opportunities. Our Korn Ferry colleagues have truly shown their resilience, pivoting to the transformation and new ways of working that will emerge in a post-pandemic world, and I look forward to what the new fiscal year will bring to our firm and our clients.'

1

Selected Financial Results

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

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Fee revenue

$

555.2

$

440.5

$

1,810.0

$

1,932.7

Total revenue

$

557.4

$

449.0

$

1,819.9

$

1,977.3

Operating income

$

86.3

$

22.2

$

155.8

$

176.0

Operating margin

15.5

%

5.0

%

8.6

%

9.1

%

Net income (loss) attributable to Korn Ferry

$

66.2

$

(0.8

)

$

114.5

$

104.9

Basic earnings (loss) per share

$

1.22

$

(0.02

)

$

2.11

$

1.91

Diluted earnings (loss) per share

$

1.21

$

(0.02

)

$

2.09

$

1.90

Adjusted Results (b):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Adjusted EBITDA

$

112.8

$

69.6

$

286.3

$

301.0

Adjusted EBITDA margin

20.3

%

15.8

%

15.8

%

15.6

%

Adjusted net income attributable to Korn Ferry

$

66.2

$

32.7

$

137.3

$

161.3

Adjusted basic earnings per share

$

1.22

$

0.60

$

2.53

$

2.94

Adjusted diluted earnings per share

$

1.21

$

0.60

$

2.51

$

2.91

___________

(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, net restructuring charges and separation costs when applicable. Adjusted results on a consolidated basis are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Integration/acquisition costs

$

-

$

2.8

$

0.7

$

12.2

Restructuring charges, net

$

-

$

40.5

$

30.7

$

58.6

Separation costs

$

-

$

-

$

-

$

1.8

Debt refinancing costs

$

-

$

-

$

-

$

0.8

Fiscal 2021 Fourth Quarter Results

The Company reported fee revenue in Q4 FY'21 of $555.2 million, an increase of 26% (up 22% on a constant currency basis) compared to Q4 FY'20. Fee revenue increased in all lines of business. The increase in fee revenue when compared to Q4 FY'20 was primarily due to the Company's recovery from the coronavirus pandemic ('COVID-19') which began to impact the Company on a worldwide basis in Q4 FY'20, as well as the increasing relevance of the Company's solutions in helping businesses solve their organizational and human capital issues in today's business environment.

Operating margin was 15.5% in Q4 FY'21 compared to 5.0% in the year-ago quarter. Adjusted EBITDA margin was 20.3%, compared to Adjusted EBITDA margin of 15.8% in the year-ago quarter. Net income attributable to Korn Ferry was $66.2 million in Q4 FY'21 compared to net loss attributable to Korn Ferry of $0.8 million in Q4 FY'20.

The year-over-year improvement in each of the above measures of profitability was due to the increase in fee revenue discussed above and cost saving actions the Company took in response to the impact of COVID-19 in both Q4 FY'20 and Q1 FY'21, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY'21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

2

Fiscal 2021 Results

The Company reported fee revenue in FY'21 of $1,810.0 million, a decrease of 6% (down 7% on a constant currency basis) compared to FY'20.

Operating income was $155.8 million in FY'21 with an operating margin of 8.6% compared to $176.0 million and 9.1% in FY'20. The decrease in operating income was primarily due to a decline in fee revenue, associated with the impact of COVID-19, partially offset by decreases in net restructuring charges, integration/acquisition costs and general administrative expenses, the latter of which resulted from the cost saving initiatives that were put in place.

Net income attributable to Korn Ferry was $114.5 million in FY'21 as compared to $104.9 million in FY'20.

Adjusted EBITDA was $286.3 million in FY'21 with Adjusted EBITDA margin of 15.8%, compared to $301.0 million and 15.6%, respectively, in the year-ago period.

3

Results by Line of Business

Selected Consulting Data

(dollars in millions) (a)

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Fee revenue

$

153.6

$

121.0

$

515.8

$

543.1

Total revenue

$

153.8

$

123.4

$

517.0

$

557.3

Ending number of consultants and execution staff (b)

1,565

1,671

1,565

1,671

Hours worked in thousands (c)

428

415

1,565

1,758

Average billed rate (d)

$

359

$

292

$

330

$

309

Adjusted Results (e):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Adjusted EBITDA

$

27.2

$

11.1

$

81.5

$

61.1

Adjusted EBITDA margin

17.7

%

9.2

%

15.8

%

11.2

%

___________

(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:

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Restructuring charges, net

$

-

$

13.4

$

14.2

$

24.5

Fee revenue was $153.6 million in Q4 FY'21 compared to $121.0 million in Q4 FY'20, an increase of $32.6 million or 27% (up 23% on a constant currency basis). The increase in fee revenue was due to the Company recovering from COVID-19, which began to negatively impact the Company on a worldwide basis in Q4 FY'20. The diversity and increasing relevance of our consulting services and our ability to adapt to delivering the services in a virtual world has led to an increase in fee revenue in Q4 FY'21 compared to the year-ago quarter.

Adjusted EBITDA was $27.2 million in Q4 FY'21 with an Adjusted EBITDA margin of 17.7% compared to Adjusted EBITDA of $11.1 million with an associated margin of 9.2%, respectively, in the year-ago quarter. This change resulted from an increase in fee revenue and a decline in general and administrative expenses, which resulted from the cost saving initiatives that were put in place. These changes were offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY'21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

4

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.

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Fee revenue

$

80.5

$

69.3

$

287.3

$

292.4

Total revenue

$

80.8

$

69.9

$

287.8

$

294.3

Ending number of consultants

295

421

295

421

Subscription & License fee revenue

$

23.6

$

20.9

$

89.9

$

73.5

Adjusted Results (b):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Adjusted EBITDA

$

27.9

$

17.0

$

86.1

$

83.1

Adjusted EBITDA margin

34.7

%

24.5

%

30.0

%

28.4

%

___________

(a)

Numbers may not total due to rounding.

(b)

Adjusted results exclude the following:

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Integration/acquisition costs

$

-

$

1.6

$

0.6

$

5.9

Restructuring charges, net

$

-

$

3.4

$

2.9

$

10.5

Fee revenue was $80.5 million in Q4 FY'21 compared to $69.3 million in Q4 FY'20, an increase of $11.2 million or 16% (up 12% on a constant currency basis). The increase in fee revenue was due to the Company recovering from COVID-19, which began to negatively impact the Company on a worldwide basis in Q4 FY'20. As economies around the world recover and companies pivot from in person training to virtual delivery of training courses, the demand for our products and services has now exceeded pre-pandemic levels.

Adjusted EBITDA was $27.9 million in Q4 FY'21 with an Adjusted EBITDA margin of 34.7% compared to $17.0 million and 24.5%, respectively, in the year-ago quarter. Contributing to the increase were higher fee revenues and decreases in general and administrative expenses, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY'21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

5

Selected Executive Search Data(a)

(dollars in millions) (b)

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Fee revenue

$

200.7

$

167.9

$

637.0

$

732.5

Total revenue

$

201.3

$

171.2

$

639.3

$

749.2

Ending number of consultants

524

556

524

556

Average number of consultants

523

569

540

560

Engagements billed

3,794

3,424

8,672

9,722

New engagements (c)

1,712

1,229

5,459

6,064

Adjusted Results (d):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Adjusted EBITDA

$

49.8

$

47.5

$

127.8

$

181.1

Adjusted EBITDA margin

24.8

%

28.3

%

20.1

%

24.7

%

________

(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:

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Restructuring charges, net

$

-

$

17.5

$

10.4

$

17.5

Separation costs

$

-

$

-

$

-

$

1.8

Fee revenue was $200.7 million and $167.9 million in Q4 FY'21 and Q4 FY'20, respectively, a year-over-year increase of $32.8 million or 20% (up 16% on a constant currency basis). The increase in fee revenue was primarily attributable to higher fee revenue in North America where demand for our products and services has now exceeded pre-pandemic levels in conjunction with the worldwide economic recovery.

Adjusted EBITDA was $49.8 million in Q4 FY'21 with an Adjusted EBITDA margin of 24.8% compared to Adjusted EBITDA of $47.5 million and Adjusted EBITDA margin of 28.3%, respectively, in the year-ago quarter. While Adjusted EBITDA was up slightly, Adjusted EBITDA margin was down 350bps due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY'21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

6

Selected RPO and Professional Search Data

(dollars in millions) (a)

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Fee revenue

$

120.4

$

82.4

$

369.9

$

364.8

Total revenue

$

121.5

$

84.5

$

375.8

$

376.6

Engagements billed (b)

1,626

1,206

3,558

3,641

New engagements (c)

883

573

2,971

2,744

Adjusted Results (d):

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Adjusted EBITDA

$

30.0

$

12.7

$

69.4

$

60.2

Adjusted EBITDA margin

24.9

%

15.4

%

18.8

%

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)

Adjusted results exclude the following:

Fourth Quarter

Year to Date

FY'21

FY'20

FY'21

FY'20

Restructuring charges, net

$

-

$

5.7

$

3.2

$

5.7

Fee revenue was $120.4 million in Q4 FY'21, an increase of $38.0 million or 46% (up 40% 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 $28.9 million or 58% (51% at constant currency) and an increase in Professional Search of $9.1 million or 28% (23% at constant currency) due to the Company recovering from COVID-19, which began to negatively impact the Company on worldwide basis in Q4 FY'20.

Adjusted EBITDA was $30.0 million in Q4 FY'21 with an Adjusted EBITDA margin of 24.9% in Q4 FY'21 compared to $12.7 million and 15.4%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the higher fee revenue discussed above, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY'21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

7

Outlook

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

Q1 FY'22 fee revenue is expected to be in the range of $535 million and $555 million; and

Q1 FY'22 diluted earnings per share is expected to range between $1.04 to $1.14.

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.

8

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.comformore 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 timing and expected benefits of our restructuring plan, 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 attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, restructuring charges, separation costs 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 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;

Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, restructuring charges and separations costs, and Consolidated and Executive SearchAdjusted EBITDA margin.

9

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 the acquisition of the acquired companies, 3) separation costs and 4) 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 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]

10

KORN FERRY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended

Year Ended

April 30,

April 30,

2021

2020

2021

2020

(unaudited)

Fee revenue

$

555,151

$

440,469

$

1,810,047

$

1,932,732

Reimbursed out-of-pocket engagement expenses

2,243

8,507

9,899

44,598

Total revenue

557,394

448,976

1,819,946

1,977,330

Compensation and benefits

380,350

283,519

1,297,880

1,297,994

General and administrative expenses

50,940

59,786

191,776

258,957

Reimbursed expenses

2,243

8,507

9,899

44,598

Cost of services

21,832

19,515

72,030

85,886

Depreciation and amortization

15,777

14,956

61,845

55,311

Restructuring charges, net

-

40,466

30,732

58,559

Total operating expenses

471,142

426,749

1,664,162

1,801,305

Operating income

86,252

22,227

155,784

176,025

Other income (loss), net

10,820

(10,893

)

37,194

(2,879

)

Interest expense, net

(7,592

)

(6,998

)

(29,278

)

(22,184

)

Income before provision for income taxes

89,480

4,336

163,700

150,962

Income tax provision

22,729

4,957

48,138

43,945

Net income (loss)

66,751

(621

)

115,562

107,017

Net income attributable to noncontrolling interest

(561

)

(181

)

(1,108

)

(2,071

)

Net income (loss) attributable to Korn Ferry

$

66,190

$

(802

)

$

114,454

$

104,946

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

Basic

$

1.22

$

(0.02

)

$

2.11

$

1.91

Diluted

$

1.21

$

(0.02

)

$

2.09

$

1.90

Weighted-average common shares outstanding:

Basic

52,621

53,534

52,928

54,342

Diluted

53,243

53,534

53,405

54,767

Cash dividends declared per share:

$

0.10

$

0.10

$

0.40

$

0.40

KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY REPORTING SEGMENT

(dollars in thousands)

(unaudited)

Three Months Ended April 30,

Year Ended April '30,

2021

2020

%Change

2021

2020

%Change

Fee revenue:

Consulting

$

153,573

$

120,992

26.9

%

$

515,844

$

543,095

(5.0

%)

Digital

80,499

69,269

16.2

%

287,306

292,366

(1.7

%)

Executive Search:

North America

130,790

102,196

28.0

%

397,275

434,624

(8.6

%)

EMEA

41,253

39,662

4.0

%

138,954

170,314

(18.4

%)

Asia Pacific

23,604

19,737

19.6

%

83,306

98,132

(15.1

%)

Latin America

5,081

6,260

(18.8

%)

17,500

29,400

(40.5

%)

Total Executive Search (a)

200,728

167,855

19.6

%

637,035

732,470

(13.0

%)

RPO and Professional Search

120,351

82,353

46.1

%

369,862

364,801

1.4

%

Total fee revenue

555,151

440,469

26.0

%

1,810,047

1,932,732

(6.3

%)

Reimbursed out-of-pocket engagement expenses

2,243

8,507

(73.6

%)

9,899

44,598

(77.8

%)

Total revenue

$

557,394

$

448,976

24.1

%

$

1,819,946

$

1,977,330

(8.0

%)

(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)

April 30,

April 30,

2021

2020

ASSETS

Cash and cash equivalents

$

850,778

$

689,244

Marketable securities

63,667

41,951

Receivables due from clients, net of allowance for doubtful accounts of $29,324 and $23,795 at April 30, 2021 and 2020, respectively

448,733

397,165

Income taxes and other receivables

40,024

38,755

Unearned compensation

53,206

43,117

Prepaid expenses and other assets

30,724

26,851

Total current assets

1,487,132

1,237,083

Marketable securities, non-current

182,692

132,134

Property and equipment, net

131,778

142,728

Operating lease right-of-use assets, net

174,121

195,077

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

161,295

146,408

Deferred income taxes

73,106

55,479

Goodwill

626,669

613,943

Intangible assets, net

92,949

111,926

Unearned compensation, non-current

102,356

79,510

Investments and other assets

24,428

29,540

Total assets

$

3,056,526

$

2,743,828

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable

$

44,993

$

45,684

Income taxes payable

23,041

21,158

Compensation and benefits payable

394,606

280,911

Operating lease liability, current

47,986

54,851

Other accrued liabilities

239,444

221,603

Total current liabilities

750,070

624,207

Deferred compensation and other retirement plans

346,455

289,136

Operating lease liability, non-current

155,998

180,766

Long-term debt

394,794

394,144

Deferred tax liabilities

3,832

1,056

Other liabilities

36,602

30,828

Total liabilities

1,687,751

1,520,137

Stockholders' equity

Common stock: $0.01 par value, 150,000 shares authorized, 74,915 and 73,205 shares issued and 54,008 and 54,450 shares outstanding at April 30, 2021 and 2020, respectively

583,260

585,560

Retained earnings

834,949

742,993

Accumulated other comprehensive loss, net

(51,820

)

(107,172

)

Total Korn Ferry stockholders' equity

1,366,389

1,221,381

Noncontrolling interest

2,386

2,310

Total stockholders' equity

1,368,775

1,223,691

Total liabilities and stockholders' equity

$

3,056,526

$

2,743,828

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(dollars in thousands, except per share amounts)

(unaudited)

Three Months Ended

Year Ended

April 30,

April 30,

2021

2020

2021

2020

Net income (loss) attributable to Korn Ferry

$

66,190

$

(802

)

$

114,454

$

104,946

Net income attributable to non-controlling interest

561

181

1,108

2,071

Net income (loss)

66,751

(621

)

115,562

107,017

Income tax provision

22,729

4,957

48,138

43,945

Income before provision for income taxes

89,480

4,336

163,700

150,962

Other (income) loss, net

(10,820

)

10,893

(37,194

)

2,879

Interest expense, net

7,592

6,998

29,278

22,184

Operating income

86,252

22,227

155,784

176,025

Depreciation and amortization

15,777

14,956

61,845

55,311

Other income (loss), net

10,820

(10,893

)

37,194

(2,879

)

Integration/acquisition costs (1)

-

2,833

737

12,152

Restructuring charges, net (2)

-

40,466

30,732

58,559

Separation costs (3)

-

-

-

1,783

Adjusted EBITDA

$

112,849

$

69,589

$

286,292

$

300,951

Operating margin

15.5

%

5.0

%

8.6

%

9.1

%

Depreciation and amortization

2.8

%

3.4

%

3.4

%

2.8

%

Other income (loss), net

2.0

%

(2.4

%)

2.1

%

(0.1

%)

Integration/acquisition costs (1)

-

0.6

%

-

0.7

%

Restructuring charges, net (2)

-

9.2

%

1.7

%

3.0

%

Separation costs (3)

-

-

-

0.1

%

Adjusted EBITDA margin

20.3

%

15.8

%

15.8

%

15.6

%

Net income (loss) attributable to Korn Ferry

$

66,190

$

(802

)

$

114,454

$

104,946

Integration/acquisition costs (1)

-

2,833

737

12,152

Restructuring charges, net (2)

-

40,466

30,732

58,559

Separation costs (3)

-

-

-

1,783

Debt refinancing costs (4)

-

-

-

828

Tax effect on the adjusted items (5)

-

(9,819

)

(8,597

)

(16,938

)

Adjusted net income attributable to Korn Ferry

$

66,190

$

32,678

$

137,326

$

161,330

Basic earnings (loss) per common share

$

1.22

$

(0.02

)

$

2.11

$

1.91

Integration/acquisition costs (1)

-

0.05

0.01

0.22

Restructuring charges, net (2)

-

0.75

0.58

1.07

Separation costs (3)

-

-

-

0.03

Debt refinancing costs (4)

-

-

-

0.02

Tax effect on the adjusted items (5)

-

(0.18

)

(0.17

)

(0.31

)

Adjusted basic earnings per share

$

1.22

$

0.60

$

2.53

$

2.94

Diluted earnings (loss) per common share

$

1.21

$

(0.02

)

$

2.09

$

1.90

Integration/acquisition costs (1)

-

0.05

0.01

0.22

Restructuring charges, net (2)

-

0.75

0.57

1.06

Separation costs (3)

-

-

-

0.03

Debt refinancing costs (4)

-

-

-

0.01

Tax effect on the adjusted items (5)

-

(0.18

)

(0.16

)

(0.31

)

Adjusted diluted earnings per share

$

1.21

$

0.60

$

2.51

$

2.91

Explanation of Non-GAAP Adjustments

(1)

Costs associated with 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 because 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)

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.

(5)

Tax effect on integration/acquisition costs, restructuring charges, net, separation costs and write-offs of debt issuance costs.

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) AND

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

(in thousands)

(unaudited)

Three Months Ended April 30, 2021

Executive Search

Consulting

Digital

North America

EMEA

Asia Pacific

Latin America

Subtotal

RPO and Professional Search

Corporate

Consolidated

Fee revenue

$

153,573

$

80,499

$

130,790

$

41,253

$

23,604

$

5,081

$

200,728

$

120,351

$

-

$

555,151

Total revenue

$

153,812

$

80,753

$

131,314

$

41,288

$

23,623

$

5,081

$

201,306

$

121,523

$

-

$

557,394

Net income attributable to Korn Ferry

$

66,190

Net income attributable to noncontrolling interest

561

Other income, net

(10,820

)

Interest expense, net

7,592

Income tax provision

22,729

Operating income

86,252

Depreciation and amortization

15,777

Other income, net

10,820

Adjusted EBITDA

$

27,240

$

27,934

$

40,660

$

3,297

$

5,066

$

809

$

49,832

$

29,958

$

(22,115

)

$

112,849

Adjusted EBITDA margin

17.7

%

34.7

%

31.1

%

8.0

%

21.5

%

15.9

%

24.8

%

24.9

%

20.3

%

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 income

22,227

Depreciation and amortization

14,956

Other loss, net

(10,893

)

Integration/acquisition costs

2,833

Restructuring, charges, net

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

%

KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF CONSOLIDATED NET INCOME AND

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

(in thousands)

(unaudited)

Year Ended April 30, 2021

Executive Search

Consulting

Digital

North America

EMEA

Asia Pacific

Latin America

Subtotal

RPO and Professional Search

Corporate

Consolidated

Fee revenue

$

515,844

$

287,306

$

397,275

$

138,954

$

83,306

$

17,500

$

637,035

$

369,862

$

-

$

1,810,047

Total revenue

$

517,046

$

287,780

$

399,104

$

139,213

$

83,463

$

17,500

$

639,280

$

375,840

$

-

$

1,819,946

Net income attributable to Korn Ferry

$

114,454

Net income attributable to noncontrolling interest

1,108

Other income, net

(37,194

)

Interest expense, net

29,278

Income tax provision

48,138

Operating income

155,784

Depreciation and amortization

61,845

Other income, net

37,194

Integration/acquisition costs

737

Restructuring charges, net

30,732

Adjusted EBITDA

$

81,522

$

86,095

$

98,099

$

11,742

$

16,676

$

1,289

$

127,806

$

69,411

$

(78,542

)

$

286,292

Adjusted EBITDA margin

15.8

%

30.0

%

24.7

%

8.5

%

20.0

%

7.4

%

20.1

%

18.8

%

15.8

%

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

176,025

Depreciation and amortization

55,311

Other loss, net

(2,879

)

Integration/acquisition costs

12,152

Restructuring charges, net

58,559

Separation costs

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

%

Disclaimer

Korn Ferry International published this content on 22 June 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 June 2021 10:52:00 UTC.


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Financials (USD)
Sales 2022 2 159 M - -
Net income 2022 207 M - -
Net cash 2022 393 M - -
P/E ratio 2022 17,6x
Yield 2022 0,52%
Capitalization 3 713 M 3 713 M -
EV / Sales 2022 1,54x
EV / Sales 2023 1,39x
Nbr of Employees 7 889
Free-Float 70,9%
Chart KORN FERRY
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Technical analysis trends KORN FERRY
Short TermMid-TermLong Term
TrendsNeutralBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 5
Last Close Price 68,74 $
Average target price 88,75 $
Spread / Average Target 29,1%
EPS Revisions
Managers and Directors
Gary Dudley Burnison President, Chief Executive Officer & Director
Robert P. Rozek Executive VP, Chief Financial & Corporate Officer
Christina A. Gold Independent Non-Executive Chairman
Brandon Johnson Chief Information Officer & Senior Vice President
Debra J. Perry Independent Director
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