Highlights
- Korn Ferry reports Q4 FY’23 fee revenue of $730.9 million, an
increase of 1% (up 3% on a constant currency basis) compared to Q4
FY’22 and full year FY’23 fee revenue of $2,835.4 million, an
increase of 8% (up 12% on a constant currency basis) compared to
FY’22.
- Net income attributable to Korn Ferry for the fourth quarter
and full year of FY’23 was $47.5 million and $209.5 million,
respectively, while diluted and adjusted diluted earnings per share
were $0.91 and $1.01 in Q4 FY’23, and were $3.95 and $4.94 for the
full year, respectively.
- Operating income and Adjusted EBITDA were $72.6 million
(operating margin of 9.9%) and $97.9 million (Adjusted EBITDA
margin of 13.4%), respectively, in Q4 FY'23, while full year
amounts were $316.3 million (operating margin of 11.2%) and $457.3
million (Adjusted EBITDA margin of 16.1%), respectively.
- The Company repurchased 255,000 shares of stock during the
quarter for $13.4 million and paid dividends of $8.0 million.
- On June 26, 2023, the Company increased its regular quarterly
cash dividend by 20% to $0.18 per share, which is payable on July
31, 2023 to stockholders of record on July 7, 2023.
- For the full year the Company continued to maintain its
balanced approach to capital allocation by investing $254.8 million
in acquisitions, investing $61.0 million in cap-ex primarily
related to the Digital business and corporate infrastructure,
spending $18.5 million on debt service costs, and returning $93.9
million and $33.0 million to shareholders in the form of share
repurchases and dividends, respectively.
Korn Ferry (NYSE: KFY), a global organizational consulting firm,
today announced fourth quarter and annual fee revenue of $730.9
million and $2,835.4 million, respectively. In addition, fourth
quarter diluted earnings per share was $0.91 and adjusted diluted
earnings per share was $1.01.
“During fiscal year 2023 our fee revenue reached an all-time
high of $2.84 billion, up 8% at actual, 12% constant currency. The
story of this period though is really about the success of our
diversification strategy, set forth over the past few years, which
has created new revenue streams and offerings, as clearly evidenced
by our clients and in our results,” said Gary D. Burnison, CEO,
Korn Ferry.
“In FY’23 we added a completely new capability – an interim and
transition management business with more than $400 million of
annual revenue on a run rate basis,” added Burnison. “Additionally,
the Consulting and Digital businesses have never been more relevant
as our clients increasingly seek transformation, growth and
profitability.
“With a world immersed in Generative AI, Korn Ferry will
continue to invest not only in these technologies, but also in
advancing our proprietary data, assessment instruments and
knowledge as these will be the ultimate differentiators.”
Selected Financial Results
(dollars in millions, except per share
amounts) (a)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
730.9
$
721.1
$
2,835.4
$
2,626.7
Total revenue
$
738.1
$
727.0
$
2,863.8
$
2,643.5
Operating income
$
72.6
$
138.8
$
316.3
$
470.1
Operating margin
9.9
%
19.2
%
11.2
%
17.9
%
Net income attributable to Korn Ferry
$
47.5
$
91.7
$
209.5
$
326.4
Basic earnings per share
$
0.91
$
1.71
$
3.98
$
6.04
Diluted earnings per share
$
0.91
$
1.70
$
3.95
$
5.98
Adjusted Results (b):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
97.9
$
144.4
$
457.3
$
538.9
Adjusted EBITDA margin
13.4
%
20.0
%
16.1
%
20.5
%
Adjusted net income attributable to Korn
Ferry
$
53.0
$
94.4
$
262.2
$
340.1
Adjusted basic earnings per share
$
1.02
$
1.77
$
4.98
$
6.30
Adjusted diluted earnings per share
$
1.01
$
1.75
$
4.94
$
6.23
______________________
(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,
impairment of fixed assets, impairment of right of use assets and
net restructuring charges when applicable. Adjusted results on a
consolidated basis are non-GAAP financial measures that adjust for
the following, as applicable (see attached reconciliations):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Integration/acquisition costs
$
5.5
$
3.6
$
14.9
$
7.9
Impairment of fixed assets
$
—
$
—
$
4.4
$
1.9
Impairment of right of use assets
$
—
$
—
$
5.5
$
7.4
Restructuring charges, net
$
1.4
$
—
$
42.6
$
—
Fiscal 2023 Fourth Quarter Results
The Company reported fee revenue in Q4 FY’23 of $730.9 million,
an increase of 1% (up 3% on a constant currency basis) compared to
Q4 FY’22. Fee revenue increased primarily due to an increase in the
Interim portion of Professional Search & Interim, resulting
from the acquisitions of Patina, Infinity Consulting Solutions and
Salo (collectively, the “acquisitions”). This was partially offset
by decreases in Executive Search, the Permanent Placement portion
of Professional Search & Interim and RPO mainly due to a
decline in demand driven by global economic factors.
Operating margin was 9.9% in Q4 FY’23, compared to 19.2% in the
year-ago quarter. Adjusted EBITDA margin was 13.4% in Q4 FY'23,
compared to 20.0% in the year-ago quarter. Net income attributable
to Korn Ferry was $47.5 million in Q4 FY'23, compared to $91.7
million in Q4 FY’22 and Adjusted EBITDA was $97.9 million in Q4
FY’23, compared to $144.4 million in Q4 FY’22.
Operating margin and Adjusted EBITDA margin decreased primarily
due to a change in fee revenue mix, with fee revenue decreasing in
Executive Search and Permanent Placement, which have higher
margins, and being replaced with fee revenue in Interim that has
lower margins, but is more resilient to economic factors and in
line with our strategy.
Fiscal 2023 Full Year Results
The Company reported fee revenue in FY’23 of $2,835.4 million,
an increase of 8% (up 12% on a constant currency basis) compared to
FY’22. Fee revenue increased in all lines of business except
Executive Search which was down about 6% compared to FY22 mainly
due to a decline in demand driven by global economic factors. The
acquisitions included in Professional Search & Interim segment
were a significant factor in the increase in fee revenue compared
to FY22.
Operating margin was 11.2% in FY’23, compared to 17.9% in FY’22.
Adjusted EBITDA margin was 16.1% in FY'23 compared to 20.5% in
FY’22. Net income attributable to Korn Ferry was $209.5 million in
FY’23 as compared to $326.4 million in FY’22 and Adjusted EBITDA
was $457.3 million in FY’23 as compared to $538.9 million in
FY’22.
Operating margin decreased primarily due to a change in fee
revenue mix, with a decrease in fee revenue in Executive Search and
Permanent Placement, which have higher margins, and being replaced
with fee revenue in Interim that has lower margins, but is more
resilient to economic factors and in line with our strategy and was
also impacted by an increase in restructuring charges, net recorded
in FY’23.
The decline in Adjusted EBITDA margin was primarily due to the
change in fee revenue mix discussed above.
Results by Line of Business
Selected Consulting Data
(dollars in millions) (a)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
175.3
$
173.9
$
677.0
$
650.2
Total revenue
$
178.0
$
175.6
$
687.0
$
654.2
Ending number of consultants and execution
staff (b)
1,853
1,841
1,853
1,841
Hours worked in thousands (c)
450
471
1,790
1,766
Average bill rate (d)
$
390
$
369
$
378
$
368
Adjusted Results (e):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
24.6
$
30.7
$
108.5
$
116.1
Adjusted EBITDA margin
14.0
%
17.6
%
16.0
%
17.9
%
______________________
(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’23
FY’22
FY’23
FY’22
Impairment of fixed assets
$
—
$
—
$
2.8
$
0.3
Impairment of right of use assets
$
—
$
—
$
3.1
$
2.5
Restructuring charges, net
$
0.8
$
—
$
11.6
$
—
Fee revenue was $175.3 million in Q4 FY’23 compared to $173.9
million in Q4 FY’22, an increase of $1.4 million or 1% (up 3% on a
constant currency basis). Consulting saw growth in our core
solution Organizational Strategy, partially offset by a decline in
fee revenue from Leadership Development.
Adjusted EBITDA was $24.6 million in Q4 FY’23 with an Adjusted
EBITDA margin of 14.0% compared to Adjusted EBITDA of $30.7 million
with an associated margin of 17.6% in the year-ago quarter. This
decrease in Adjusted EBITDA resulted primarily from an increase in
compensation and benefits expense due to higher performance-related
bonus expense, partially offset by an increase in fee revenue.
Selected Digital Data
(dollars in millions) (a)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
91.5
$
89.5
$
354.7
$
349.0
Total revenue
$
91.5
$
89.5
$
355.0
$
349.4
Ending number of consultants
347
305
347
305
Subscription & License fee revenue
$
31.6
$
29.1
$
119.7
$
108.7
Adjusted Results (b):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
23.6
$
27.7
$
97.5
$
110.1
Adjusted EBITDA margin
25.8
%
31.0
%
27.5
%
31.5
% ______________________
(a)
Numbers may not total due to
rounding.
(b)
Adjusted results exclude the
following:
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Impairment of fixed assets
$
—
$
—
$
1.5
$
0.2
Impairment of right of use assets
$
—
$
—
$
1.7
$
1.3
Restructuring charges, net
$
—
$
—
$
2.9
$
—
Fee revenue was $91.5 million in Q4 FY’23 compared to $89.5
million in Q4 FY’22, an increase of $2.0 million or 2% (up 5% on a
constant currency basis). The accumulation of sales of
subscriptions in fiscal 2023 has created year-over-year growth in
subscription based revenue with increases in both sales
effectiveness and total rewards tools.
Adjusted EBITDA was $23.6 million in Q4 FY’23 with an Adjusted
EBITDA margin of 25.8% compared to $27.7 million and 31.0%,
respectively, in the year-ago quarter. The decrease in Adjusted
EBITDA and Adjusted EBITDA margin resulted from an increase in
compensation and benefits primarily due to an increase in average
headcount compared to the year-ago quarter, partially offset by an
increase in fee revenue discussed above.
Selected Executive Search
Data(a)
(dollars in millions) (b)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
212.6
$
244.2
$
875.8
$
935.6
Total revenue
$
214.6
$
245.7
$
883.3
$
939.9
Ending number of consultants
602
587
602
587
Average number of consultants
609
584
594
555
Engagements billed
3,772
4,417
10,091
11,085
New engagements (c)
1,508
1,851
6,343
7,213
Adjusted Results (d):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
42.7
$
64.2
$
205.8
$
257.6
Adjusted EBITDA margin
20.1
%
26.3
%
23.5
%
27.5
%
______________________
(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’23
FY’22
FY’23
FY’22
Impairment of fixed assets
$
—
$
—
$
—
$
0.1
Impairment of right of use assets
$
—
$
—
$
—
$
0.9
Restructuring charges, net
$
0.6
$
—
$
20.1
$
—
Fee revenue was $212.6 million and $244.2 million in Q4 FY’23
and Q4 FY’22, respectively, a year-over-year decrease of 13% (down
11% on a constant currency basis). Fee revenue saw a decline in all
regions of Executive Search as a result of a 15% decrease in the
number of engagements billed, partially offset by a 4% increase in
weighted-average fee billed per engagement (calculated using local
currency).
Adjusted EBITDA was $42.7 million in Q4 FY’23 with an Adjusted
EBITDA margin of 20.1% compared to Adjusted EBITDA of $64.2 million
and an Adjusted EBITDA margin of 26.3%, respectively, in the
year-ago quarter. The decrease in Adjusted EBITDA was primarily due
to the decrease in fee revenue discussed above, partially offset by
a decrease in performance-related bonus expense.
Selected Professional Search &
Interim Data(a)
(dollars in millions) (b)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
151.7
$
100.7
$
503.4
$
297.1
Total revenue
$
152.6
$
101.1
$
507.1
$
298.0
Permanent Placement:
Fee revenue
$
62.5
$
81.5
$
281.1
$
262.9
Engagements billed (c)
2,304
2,892
7,435
6,633
New engagements (d)
1,364
1,904
6,486
5,633
Ending number of consultants (e)
401
479
401
479
Interim: (started in Q3 FY'22)
Fee revenue
$
89.2
$
19.2
$
222.3
$
34.2
Average bill rate (f)
$
124
$
104
$
115
$
98
Average weekly billable consultants
(g)
1,683
406
1,079
388
Adjusted Results (h):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
27.3
$
33.4
$
110.9
$
106.0
Adjusted EBITDA margin
18.0
%
33.2
%
22.0
%
35.7
%
_____________________
(a)
In the first quarter of fiscal 2023, the
Company changed the composition of its global segments.
Professional Search & Interim segment represents the single
hire to multi hire permanent placement and interim business that
was previously included in the RPO & Professional Search
segment. Segment data for Q4 FY’22 and year to date FY ’22 has been
recast to reflect the division of the RPO & Professional Search
segment into the RPO segment and Professional Search & Interim
segment.
(b)
Numbers may not total due to
rounding.
(c)
Represents engagements billed for
professional search.
(d)
Represents new engagements opened
for professional search in the respective period.
(e)
Represents number of employees
originating professional search.
(f)
Fee revenue from interim divided
by the number of hours worked by consultants.
(g)
The number of billable
consultants based on a weekly average in the respective period.
(h)
Adjusted results exclude the
following:
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Impairment of fixed assets
$
—
$
—
$
0.1
$
0.9
Impairment of right of use assets
$
—
$
—
$
0.6
$
1.4
Integration/acquisition costs
$
4.3
$
2.3
$
11.0
$
3.7
Restructuring charges, net
$
—
$
—
$
4.8
$
—
Fee revenue was $151.7 million in Q4 FY’23, an increase of $51.0
million or 51% (up 52% on a constant currency basis), compared to
the year-ago quarter. The increase in fee revenue was mainly driven
by the acquisitions, partially offset by a decrease in Permanent
Placement fee revenue.
Adjusted EBITDA was $27.3 million in Q4 FY’23 with an Adjusted
EBITDA margin of 18.0% compared to $33.4 million and 33.2%,
respectively, in the year-ago quarter. The decrease in Adjusted
EBITDA margin was primarily due to a change in the revenue mix with
decreases in Permanent Placement fee revenue being more than offset
by an increase in fee revenue from Interim due to the acquisitions,
which have lower margins but are more resilient to economic factors
and in line with our strategy.
Selected RPO Data(a)
(dollars in millions) (b)
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Fee revenue
$
99.8
$
112.8
$
424.6
$
394.8
Total revenue
$
101.4
$
115.0
$
431.5
$
401.9
Remaining revenue under contract(c)
$
776.7
$
776.8
$
776.7
$
776.8
RPO new business(d)
$
115.1
$
212.7
$
597.8
$
597.1
Adjusted Results (e):
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Adjusted EBITDA
$
9.0
$
17.4
$
52.6
$
59.1
Adjusted EBITDA margin
9.0
%
15.4
%
12.4
%
15.0
%
______________________
(a)
In the first quarter of fiscal 2023, the
Company changed the composition of its global segments. RPO segment
represents the recruitment outsourcing business that was previously
included in the RPO & Professional Search segment. Segment data
for Q4 FY’22 and year to date FY’22 has been recast to reflect the
division of the RPO & Professional Search segment into a RPO
segment and Professional Search & Interim segment.
(b)
Numbers may not total due to
rounding.
(c)
Estimated fee revenue associated
with signed contracts for which revenue has not yet been
recognized.
(d)
Estimated total value of a
contract at the point of execution of the contract.
(e)
Adjusted results exclude the
following:
Fourth Quarter
Year to Date
FY’23
FY’22
FY’23
FY’22
Impairment of fixed assets
$
—
$
—
$
—
$
0.4
Impairment of right of use assets
$
—
$
—
$
0.1
$
1.2
Restructuring charges, net
$
—
$
—
$
3.1
$
—
Fee revenue was $99.8 million in Q4 FY’23, a decrease of $13.0
million or 12% (down 9% on a constant currency basis), compared to
the year-ago quarter. RPO fee revenue decreased due to a decline in
demand driven by global economic factors.
Adjusted EBITDA was $9.0 million in Q4 FY’23 with an Adjusted
EBITDA margin of 9.0% compared to $17.4 million and 15.4%,
respectively, in the year-ago quarter. The decrease in Adjusted
EBITDA was primarily due to the decrease in fee revenue, partially
offset by a decrease in compensation and benefits expense.
Outlook
Assuming no new major pandemic related lockdowns or further
changes in worldwide geopolitical conditions, economic conditions,
financial markets or foreign exchange rates, on a consolidated
basis:
- Q1 FY’24 fee revenue is expected to be in the range of $668
million and $698 million; and
- Q1 FY’24 diluted earnings per share is expected to range
between $0.78 to $0.95.
On a consolidated adjusted basis:
- Q1 FY’24 adjusted diluted earnings per share is expected to be
in the range from $0.84 to $1.00.
Q1 FY’24 Earnings Per Share
Outlook
Low
High
Consolidated diluted earnings per
share
$
0.78
$
0.95
Integration/acquisition costs
0.09
0.07
Tax rate Impact
(0.03
)
(0.02
)
Consolidated adjusted diluted earnings per
share(1)
$
0.84
$
1.00
______________________
(1)
Consolidated adjusted diluted
earnings per share is a non-GAAP financial measure that excludes
the items listed in the table.
Earnings Conference Call Webcast
The earnings conference call will be held today at 12:00 PM
(EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek, SVP
Business Development & Analytics Gregg Kvochak and VP Investor
Relations Tiffany Louder. The conference call will be webcast and
available online at ir.kornferry.com. We will also post to this
section of our website earnings slides, which will accompany our
webcast, and other important information, and encourage you to
review the information that we make available on our website.
About Korn Ferry
Korn Ferry is a global organizational consulting firm. We help
clients synchronize strategy and talent to drive superior
performance. We work with organizations to design their structures,
roles, and responsibilities. We help them hire the right people to
bring their strategy to life. And we advise them on how to reward,
develop, and motivate their people. Visit kornferry.com for more
information.
Forward-Looking Statements
Statements in this press release and our conference call that
relate to our outlook, projections, goals, strategies, future plans
and expectations, including statements relating to expected demand
for our products and services, 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. 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 any pandemic or
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, including concerns regarding a potential
recession, inflation, interest rates, tax rates, and economic
uncertainty, 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, dislocation in the
labor markets and increasing competition for highly skilled
workers, our ability to maintain relationships with customers and
suppliers and retain key employees, maintaining our brand name and
professional reputation, impact of inflationary pressures on our
profitability, 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, social and governance
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, 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, expansion of social media platforms,
seasonality, ability to effect acquisition and integrate acquired
businesses, including Infinity Consulting Solutions and Salo 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, impairment of fixed assets,
impairment of right of use assets and restructuring charges net of
income tax effect;
- Adjusted basic and diluted earnings per share, adjusted to
exclude integration/acquisition costs, impairment of fixed assets,
impairment of right of use assets and restructuring charges net of
income tax effect;
- Constant currency (calculated using a quarterly average)
percentages that represent the percentage change that would have
resulted had exchange rates in the prior period been the same as
those in effect in the current period; and
- Consolidated and Executive Search Adjusted EBITDA, which is
earnings before interest, taxes, depreciation and amortization,
further adjusted to exclude integration/acquisition costs,
impairment of fixed assets, impairment of right of use assets and
restructuring charges when applicable, and Consolidated and
Executive Search Adjusted EBITDA margin.
This non-GAAP disclosure has limitations as an analytical tool,
should not be viewed as a substitute for financial information
determined in accordance with GAAP, and should not be considered in
isolation or as a substitute for analysis of the Company’s results
as reported under GAAP, nor is it necessarily comparable to
non-GAAP performance measures that may be presented by other
companies.
Management believes the presentation of non-GAAP financial
measures in this press release provides meaningful supplemental
information regarding Korn Ferry’s performance by excluding certain
charges that may not be indicative of Korn Ferry’s ongoing
operating results. These non-GAAP financial measures are
performance measures and are not indicative of the liquidity of
Korn Ferry. These charges, which are described in the footnotes in
the attached reconciliations, represent 1) costs we incurred to
acquire and integrate a portion of our Professional Search &
Interim business, 2) impairment of fixed assets associated with the
decision to terminate and sublease some of our offices, 3)
impairment of right of use assets due to the decision to terminate
and sublease some of our offices and 4) Restructuring charges, net
to realign workforce with the Company’s business needs and
objectives. 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.
KORN FERRY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(in thousands, except per
share amounts)
Three Months Ended
April 30,
Year Ended April
30,
2023
2022
2023
2022
(unaudited)
Fee revenue
$
730,874
$
721,139
$
2,835,408
$
2,626,718
Reimbursed out-of-pocket engagement
expenses
7,250
5,864
28,428
16,737
Total revenue
738,124
727,003
2,863,836
2,643,455
Compensation and benefits
491,429
467,706
1,901,203
1,741,452
General and administrative expenses
66,130
62,129
268,458
237,272
Reimbursed expenses
7,250
5,864
28,428
16,737
Cost of services
81,347
36,411
238,499
114,399
Depreciation and amortization
17,976
16,140
68,335
63,521
Restructuring charges, net
1,411
—
42,573
—
Total operating expenses
665,543
588,250
2,547,496
2,173,381
Operating income
72,581
138,753
316,340
470,074
Other income (loss), net
437
(14,116
)
5,261
(11,880
)
Interest expense, net
(5,776
)
(6,473
)
(25,864
)
(25,293
)
Income before provision for income
taxes
67,242
118,164
295,737
432,901
Income tax provision
19,108
25,105
82,683
102,056
Net income
48,134
93,059
213,054
330,845
Net income attributable to noncontrolling
interest
(640
)
(1,395
)
(3,525
)
(4,485
)
Net income attributable to Korn Ferry
$
47,494
$
91,664
$
209,529
$
326,360
Earnings per common share attributable to
Korn Ferry:
Basic
$
0.91
$
1.71
$
3.98
$
6.04
Diluted
$
0.91
$
1.70
$
3.95
$
5.98
Weighted-average common shares
outstanding:
Basic
51,009
52,352
51,482
52,807
Diluted
51,234
52,834
51,883
53,401
Cash dividends declared per share:
$
0.15
$
0.12
$
0.60
$
0.48
KORN FERRY AND
SUBSIDIARIES
FINANCIAL SUMMARY BY REPORTING
SEGMENT
(dollars in thousands)
(unaudited)
Three Months Ended April
30,
Year Ended April 30,
2023
2022
% Change
2023
2022
% Change
Fee revenue:
Consulting
$
175,270
$
173,944
0.8
%
$
677,001
$
650,204
4.1
%
Digital
91,490
89,521
2.2
%
354,651
349,025
1.6
%
Executive Search:
North America
135,300
156,232
(13.4
)%
562,139
605,704
(7.2
%)
EMEA
46,353
49,502
(6.4
)%
187,014
182,192
2.6
%
Asia Pacific
23,188
30,211
(23.2
)%
95,598
118,596
(19.4
%)
Latin America
7,764
8,254
(5.9
)%
31,047
29,069
6.8
%
Total Executive Search (a)
212,605
244,199
(12.9
)%
875,798
935,561
(6.4
%)
Professional Search & Interim
151,725
100,685
50.7
%
503,395
297,096
69.4
%
RPO
99,784
112,790
(11.5
)%
424,563
394,832
7.5
%
Total fee revenue
730,874
721,139
1.3
%
2,835,408
2,626,718
7.9
%
Reimbursed out-of-pocket engagement
expenses
7,250
5,864
23.6
%
28,428
16,737
69.9
%
Total revenue
$
738,124
$
727,003
1.5
%
$
2,863,836
$
2,643,455
8.3
%
(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, 2023
April 30, 2022
ASSETS
Cash and cash equivalents
$
844,024
$
978,070
Marketable securities
44,837
57,244
Receivables due from clients, net of
allowance for doubtful accounts of $44,377 and $36,384 at April 30,
2023 and 2022, respectively
569,601
590,260
Income taxes and other receivables
67,512
31,884
Unearned compensation
63,476
60,749
Prepaid expenses and other assets
49,219
41,763
Total current assets
1,638,669
1,759,970
Marketable securities, non-current
179,040
175,783
Property and equipment, net
161,876
138,172
Operating lease right-of-use assets,
net
142,690
167,734
Cash surrender value of company-owned life
insurance policies, net of loans
197,998
183,308
Deferred income taxes
102,057
84,712
Goodwill
909,491
725,592
Intangible assets, net
114,426
89,770
Unearned compensation, non-current
103,607
118,238
Investments and other assets
24,590
21,267
Total assets
$
3,574,444
$
3,464,546
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable
$
53,386
$
50,932
Income taxes payable
19,969
34,450
Compensation and benefits payable
532,934
547,826
Operating lease liability, current
45,821
48,609
Other accrued liabilities
324,150
302,408
Total current liabilities
976,260
984,225
Deferred compensation and other retirement
plans
396,534
357,175
Operating lease liability, non-current
119,220
151,212
Long-term debt
396,194
395,477
Deferred tax liabilities
5,352
2,715
Other liabilities
27,879
24,153
Total liabilities
1,921,439
1,914,957
Stockholders' equity
Common stock: $0.01 par value, 150,000
shares authorized, 76,693 and 75,409 shares issued and 52,269 and
53,190 shares outstanding at April 30, 2023 and 2022,
respectively
429,754
502,008
Retained earnings
1,311,081
1,134,523
Accumulated other comprehensive loss,
net
(92,764
)
(92,185
)
Total Korn Ferry stockholders' equity
1,648,071
1,544,346
Noncontrolling interest
4,934
5,243
Total stockholders' equity
1,653,005
1,549,589
Total liabilities and stockholders'
equity
$
3,574,444
$
3,464,546
KORN FERRY AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except
per share amounts)
(unaudited)
Three Months Ended
April 30,
Year Ended April
30,
2023
2022
2023
2022
Net income attributable to Korn Ferry
$
47,494
$
91,664
$
209,529
$
326,360
Net income attributable to non-controlling
interest
640
1,395
3,525
4,485
Net income
48,134
93,059
213,054
330,845
Income tax provision
19,108
25,105
82,683
102,056
Income before provision for income
taxes
67,242
118,164
295,737
432,901
Other (income) loss, net
(437
)
14,116
(5,261
)
11,880
Interest expense, net
5,776
6,473
25,864
25,293
Operating income
72,581
138,753
316,340
470,074
Depreciation and amortization
17,976
16,140
68,335
63,521
Other income (loss), net
437
(14,116
)
5,261
(11,880
)
Integration/acquisition costs (1)
5,450
3,608
14,922
7,906
Impairment of fixed assets (2)
—
—
4,375
1,915
Impairment of right of use assets (3)
—
—
5,471
7,392
Restructuring charges, net (4)
1,411
—
42,573
—
Adjusted EBITDA
$
97,855
$
144,385
$
457,277
$
538,928
Operating margin
9.9
%
19.2
%
11.2
%
17.9
%
Depreciation and amortization
2.5
%
2.2
%
2.4
%
2.4
%
Other income (loss), net
0.1
%
(1.9
) %
0.2
%
(0.5
) %
Integration/acquisition costs (1)
0.7
%
0.5
%
0.5
%
0.3
%
Impairment of fixed assets (2)
—
—
0.1
%
0.1
%
Impairment of right of use assets (3)
—
—
0.2
%
0.3
%
Restructuring charges, net (4)
0.2
%
—
1.5
%
—
Adjusted EBITDA margin
13.4
%
20.0
%
16.1
%
20.5
%
Net income attributable to Korn Ferry
$
47,494
$
91,664
$
209,529
$
326,360
Integration/acquisition costs (1)
5,450
3,608
14,922
7,906
Impairment of fixed assets (2)
—
—
4,375
1,915
Impairment of right of use assets (3)
—
—
5,471
7,392
Restructuring charges, net (4)
1,411
—
42,573
—
Tax effect on the adjusted items (5)
(1,309
)
(844
)
(14,719
)
(3,476
)
Adjusted net income attributable to Korn
Ferry
$
53,046
$
94,428
$
262,151
$
340,097
Basic earnings per common share
$
0.91
$
1.71
$
3.98
$
6.04
Integration/acquisition costs (1)
0.11
0.08
0.29
0.15
Impairment of fixed assets (2)
—
—
0.08
0.04
Impairment of right of use assets (3)
—
—
0.10
0.14
Restructuring charges, net (4)
0.03
—
0.82
—
Tax effect on the adjusted items (5)
(0.03
)
(0.02
)
(0.29
)
(0.07
)
Adjusted basic earnings per share
$
1.02
$
1.77
$
4.98
$
6.30
Diluted earnings per common share
$
0.91
$
1.70
$
3.95
$
5.98
Integration/acquisition costs (1)
0.10
0.07
0.28
0.15
Impairment of fixed assets (2)
—
—
0.08
0.03
Impairment of right of use assets (3)
—
—
0.10
0.14
Restructuring charges, net (4)
0.03
—
0.82
—
Tax effect on the adjusted items (5)
(0.03
)
(0.02
)
(0.29
)
(0.07
)
Adjusted diluted earnings per share
$
1.01
$
1.75
$
4.94
$
6.23
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)
Costs associated with impairment
of fixed assets (i.e. leasehold improvements) due to terminating
and deciding to sublease some of our office leases.
(3)
Costs associated with impairment
of right-of-use assets due to terminating and deciding to sublease
some of our office leases.
(4)
Restructuring charges we incurred
to realign workforce with business needs and objectives due to
shifts in global trade lanes and persistent inflationary
pressures.
(5)
Tax effect on
integration/acquisition costs, impairment of fixed assets and right
of use assets, and restructuring charges, net.
KORN FERRY AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES - CONTINUED
(unaudited)
Three Months Ended April
30,
2023
2022
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
(dollars in thousands)
Consulting
$
175,270
$
177,985
$
24,558
14.0 %
$
173,944
$
175,636
$
30,650
17.6 %
Digital
91,490
91,488
23,603
25.8 %
89,521
89,543
27,720
31.0 %
Executive Search:
North America
135,300
136,926
28,686
21.2 %
156,232
157,422
43,676
28.0 %
EMEA
46,353
46,671
6,803
14.7 %
49,502
49,786
8,476
17.1 %
Asia Pacific
23,188
23,287
5,499
23.7 %
30,211
30,258
9,133
30.2 %
Latin America
7,764
7,765
1,684
21.7 %
8,254
8,258
2,885
35.0 %
Total Executive Search
212,605
214,649
42,672
20.1 %
244,199
245,724
64,170
26.3 %
Professional Search &
Interim
151,725
152,628
27,292
18.0 %
100,685
101,143
33,407
33.2 %
RPO
99,784
101,374
9,026
9.0 %
112,790
114,957
17,400
15.4 %
Corporate
—
—
(29,296)
—
—
(28,962)
Consolidated
$
730,874
$
738,124
$
97,855
13.4 %
$
721,139
$
727,003
$
144,385
20.0 %
Years Ended April 30,
2023
2022
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
(dollars in thousands)
Consulting
$
677,001
$
686,979
$
108,502
16.0 %
$
650,204
$
654,199
$
116,108
17.9 %
Digital
354,651
354,967
97,458
27.5 %
349,025
349,437
110,050
31.5 %
Executive Search:
North America
562,139
568,212
140,850
25.1 %
605,704
609,258
181,615
30.0 %
EMEA
187,014
188,114
31,380
16.8 %
182,192
182,866
31,804
17.5 %
Asia Pacific
95,598
95,956
24,222
25.3 %
118,596
118,705
35,105
29.6 %
Latin America
31,047
31,054
9,370
30.2 %
29,069
29,079
9,089
31.3 %
Total Executive Search
875,798
883,336
205,822
23.5 %
935,561
939,908
257,613
27.5 %
Professional Search &
Interim
503,395
507,058
110,879
22.0 %
297,096
297,974
106,015
35.7 %
RPO
424,563
431,496
52,588
12.4 %
394,832
401,937
59,126
15.0 %
Corporate
—
—
(117,972)
—
—
(109,984)
Consolidated
$
2,835,408
$
2,863,836
$
457,277
16.1 %
$
2,626,718
$
2,643,455
$
538,928
20.5 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230620800168/en/
Investor Relations: Tiffany Louder, (214) 310-8407 Media: Dan
Gugler, (310) 226-2645
Korn Ferry (NYSE:KFY)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Korn Ferry (NYSE:KFY)
Historical Stock Chart
Von Mai 2023 bis Mai 2024