Highlights
- Korn Ferry reports Q1 FY'24 fee revenue of $699.2 million,
essentially flat from Q1 FY'23.
- Net income attributable to Korn Ferry was $46.6 million, while
diluted and adjusted diluted earnings per share were $0.89 and
$0.99 in Q1 FY'24, respectively.
- Operating income was $56.8 million (operating margin of 8.1%)
and Adjusted EBITDA was $95.7 million (Adjusted EBITDA margin of
13.7%), in Q1 FY'24.
- The Company repurchased 90,000 shares of stock during the
quarter for $4.2 million.
- Declared a quarterly dividend of $0.18 per share on September
6, 2023, which is payable on October 13, 2023 to stockholders of
record on September 22, 2023.
Korn Ferry (NYSE: KFY), a global organizational consulting firm,
today announced first quarter fee revenue of $699.2 million. In
addition, first quarter diluted earnings per share was $0.89 and
adjusted diluted earnings per share was $0.99.
“During the fiscal first quarter we generated $699 million in
fee revenue, flat year-over-year. Despite a more challenging
market, I’m very proud of our organization and what we have
achieved, particularly as earnings and profitability held steady
sequentially as we delivered $0.89 of diluted earning per share and
$0.99 of adjusted diluted earnings per share and $96 million of
Adjusted EBITDA, with a 13.7% margin,” said Gary D. Burnison, CEO,
Korn Ferry.
“Our diversification strategy continues to positively influence
our results,” added Burnison. “Our Consulting and Digital
businesses have never been more meaningful—especially in tomorrow’s
economy where there will be continued demographic and skill shifts
across much of the world. We’re responding with expertise and
solutions focused on interim talent, learning and professional
development, engagement, retention, culture, assessments, and
organizational design, as well as total rewards. We are creating
more ways to deepen relationships with our clients.”
Selected Financial Results
(dollars in millions, except per share
amounts) (a)
First Quarter
FY’24
FY’23
Fee revenue
$
699.2
$
695.9
Total revenue
$
706.3
$
703.1
Operating income
$
56.8
$
111.6
Operating margin
8.1
%
16.0
%
Net income attributable to Korn Ferry
$
46.6
$
77.2
Basic earnings per share
$
0.89
$
1.46
Diluted earnings per share
$
0.89
$
1.45
Adjusted Results (b):
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
95.7
$
132.2
Adjusted EBITDA margin
13.7
%
19.0
%
Adjusted net income attributable to Korn
Ferry
$
51.5
$
80.0
Adjusted basic earnings per share
$
0.99
$
1.51
Adjusted diluted earnings per share
$
0.99
$
1.50
______________________
(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 restructuring charges, net
when applicable. Adjusted results on a consolidated basis are
non-GAAP financial measures that adjust for the following, as
applicable (see attached reconciliations):
First Quarter
FY’24
FY’23
Integration/acquisition costs
$
4.1
$
3.6
Impairment of fixed assets
$
0.1
$
—
Impairment of right of use assets
$
1.6
$
—
Restructuring charges, net
$
0.4
$
—
The Company reported fee revenue in Q1 FY'24 of $699.2 million,
essentially flat at actual and constant currency when compared to
Q1 FY'23. Fee revenue remained constant primarily due to an
increase in the Interim portion of Professional Search &
Interim, resulting from the acquisitions of Infinity Consulting
Solutions which was effective August 1, 2022 and Salo which was
effective February 1, 2023 (collectively, the “acquisitions”). This
was partially offset by decreases in our permanent placement talent
acquisition offerings, which includes Executive Search, Permanent
Placement and RPO, due to a decline in demand driven by global
economic and other factors.
Operating margin was 8.1% in Q1 FY'24, compared to 16.0% in the
year-ago quarter. Adjusted EBITDA margin was 13.7% in Q1 FY'24,
compared to 19.0%, in the year-ago quarter. Net income attributable
to Korn Ferry was $46.6 million in Q1 FY'24, compared to $77.2
million in Q1 FY'23 and Adjusted EBITDA was $95.7 million in Q1
FY'24 compared to $132.2 million in Q1 FY'23.
Operating income decreased primarily due to a higher cost of
services expense associated with the recently acquired Interim
businesses, and an increase in compensation and benefits expense.
Net income attributable to Korn Ferry decreased due to the same
factors discussed above and higher other income, net partially
offset by lower income tax provision.
Adjusted EBITDA decreased due to the same factors discussed
above (except other income, net and income tax provision).
Results by Line of Business
Selected Consulting Data
(dollars in millions) (a)
First Quarter
FY’24
FY’23
Fee revenue
$
168.1
$
166.5
Total revenue
$
170.8
$
168.7
Ending number of consultants and execution
staff (b)
1,855
1,879
Hours worked in thousands (c)
427
459
Average bill rate (d)
$
394
$
363
Adjusted Results (e):
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
25.2
$
29.6
Adjusted EBITDA margin
15.0
%
17.7
%
______________________
(a)
Numbers may not total due to rounding.
(b)
Represents number of employees
originating, delivering and executing consulting services.
(c)
The number of hours worked by consultant
and execution staff during the period.
(d)
The amount of fee revenue divided by the
number of hours worked by consultants and execution staff.
(e)
Adjusted results exclude the
following:
First Quarter
FY’24
FY’23
Impairment of right of use assets
$
0.6
$
—
Restructuring charges, net
$
0.2
$
—
Fee revenue was $168.1 million in Q1 FY'24 compared to $166.5
million in Q1 FY'23, essentially flat at actual and constant
currency. The slight increase in Consulting fee revenue was driven
by growth in assessment & succession.
Adjusted EBITDA was $25.2 million in Q1 FY'24 with an Adjusted
EBITDA margin of 15.0% compared to Adjusted EBITDA of $29.6 million
with an associated margin of 17.7%, respectively, in the year-ago
quarter. This decrease in Adjusted EBITDA resulted primarily from
an increase in compensation and benefits expense, partially offset
by a slight increase in Consulting fee revenue and a decrease in
cost of services expense.
Selected Digital Data
(dollars in millions) (a)
First Quarter
FY’24
FY’23
Fee revenue
$
88.0
$
83.8
Total revenue
$
88.0
$
83.8
Ending number of consultants
336
331
Subscription & License fee revenue
$
32.5
$
29.6
Adjusted Results:
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
24.3
$
24.2
Adjusted EBITDA margin
27.6
%
28.9
%
______________________
(a)
Numbers may not total due to rounding.
Fee revenue was $88.0 million in Q1 FY'24 compared to $83.8
million in Q1 FY'23, an increase of $4.2 million or 5% (up 5% on a
constant currency basis). The increase was primarily due to growth
in subscription-based fee revenue.
Adjusted EBITDA was $24.3 million in Q1 FY'24 with an Adjusted
EBITDA margin of 27.6% compared to $24.2 million and 28.9%,
respectively, in the year-ago quarter. Adjusted EBITDA remained
relatively flat compared to the year-ago period.
Selected Executive Search
Data(a)
(dollars in millions) (b)
First Quarter
FY’24
FY’23
Fee revenue
$
205.2
$
232.8
Total revenue
$
207.6
$
234.5
Ending number of consultants
612
619
Average number of consultants
607
603
Engagements billed
3,633
4,133
New engagements (c)
1,503
1,682
Adjusted Results (d):
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
42.5
$
62.2
Adjusted EBITDA margin
20.7
%
26.7
%
______________________
(a)
Executive Search is the sum of the
individual Executive Search Reporting Segments described in our
annual and quarterly reporting on Forms 10-K and 10-Q and is
presented on a consolidated basis as it is consistent with the
Company’s discussion of its Lines of Business, and financial
metrics used by the Company’s investor base.
(b)
Numbers may not total due to rounding.
(c)
Represents new engagements opened in the
respective period.
(d)
Executive Search Adjusted EBITDA and
Adjusted EBITDA margin are non-GAAP financial measures that adjust
for the following:
First Quarter
FY’24
FY’23
Impairment of fixed assets
$
0.1
$
—
Impairment of right of use assets
$
0.9
$
—
Restructuring charges, net
$
0.2
$
—
Fee revenue was $205.2 million and $232.8 million in Q1 FY'24
and Q1 FY'23, respectively, a year-over-year decrease of 12% at
both actual and constant currency. The decrease in fee revenue was
primarily driven by a decline in demand for executive searches as a
result of clients being affected by the uncertain economic
environment.
Adjusted EBITDA was $42.5 million in Q1 FY'24 with an Adjusted
EBITDA margin of 20.7% compared to Adjusted EBITDA of $62.2 million
and an Adjusted EBITDA margin of 26.7%, 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 lower performance-related bonus expense.
Selected Professional Search &
Interim Data
(dollars in millions) (a)
First Quarter
FY’24
FY’23
Fee revenue
$
142.2
$
98.9
Total revenue
$
143.1
$
100.1
Permanent Placement:
Fee revenue
$
58.3
$
74.1
Engagements billed (b)
2,209
2,739
New engagements (c)
1,235
1,846
Ending number of consultants (d)
405
497
Interim:
Fee revenue
$
83.9
$
24.8
Average bill rate (e)
$
122
$
122
Average weekly billable consultants
(f)
1,485
463
Adjusted Results (g):
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
24.3
$
29.2
Adjusted EBITDA margin
17.1
%
29.5
%
_____________________
(a)
Numbers may not total due to rounding.
(b)
Represents engagements billed for
professional search.
(c)
Represents new engagements opened for
professional search in the respective period.
(d)
Represents number of employees originating
professional search.
(e)
Fee revenue from interim divided by the
number of hours worked by consultants.
(f)
The number of billable consultants based
on a weekly average in the respective period.
(g)
Adjusted results exclude the
following:
First Quarter
FY’24
FY’23
Integration/acquisition costs
$
4.0
$
2.5
Fee revenue was $142.2 million in Q1 FY'24, an increase of 44%
at both actual and constant currency compared to the year-ago
quarter. The increase in fee revenue was mainly driven by
additional fee revenue from the acquisitions, partially offset by a
decrease in Permanent Placement fee revenue.
Adjusted EBITDA was $24.3 million in Q1 FY'24 with an Adjusted
EBITDA margin of 17.1% compared to $29.2 million and 29.5%,
respectively, in the year-ago quarter. The decrease in Adjusted
EBITDA and Adjusted EBITDA margin was primarily due to a change in
the revenue mix, with decreases in Permanent Placement fee revenue
that were more than offset by increases in fee revenue from Interim
due to the acquisitions. Interim has lower margins but are
typically more resilient to global economic fluctuations and in
line with our strategy.
Selected Recruitment Process
Outsourcing ("RPO") Data
(dollars in millions) (a)
First Quarter
FY’24
FY’23
Fee revenue
$
95.7
$
113.9
Total revenue
$
96.8
$
116.1
Remaining revenue under contract (b)
$
679.8
$
805.6
RPO new business (c)
$
48.2
$
148.4
Adjusted Results (d):
First Quarter
FY’24
FY’23
Adjusted EBITDA
$
10.5
$
17.7
Adjusted EBITDA margin
10.9
%
15.5
%
______________________
(a)
Numbers may not total due to rounding.
(b)
Estimated fee revenue associated with
signed contracts for which revenue has not yet been recognized.
(c)
Estimated total value of a contract at the
point of execution of the contract.
(d)
Adjusted results exclude the
following:
First Quarter
FY’24
FY’23
Impairment of right of use assets
$
0.1
$
—
Fee revenue was $95.7 million in Q1 FY'24, a decrease of 16% at
both actual and constant currency compared to the year-ago quarter.
RPO fee revenue decreased due to reduced demand for the number of
placements being requested by existing clients.
Adjusted EBITDA was $10.5 million in Q1 FY'24 with an Adjusted
EBITDA margin of 10.9% compared to $17.7 million and 15.5%,
respectively, in the year-ago quarter. The decrease in Adjusted
EBITDA was primarily due to the decline in demand and fee revenue
driven by global economic and other factors, partially offset by a
decrease in compensation and benefit expenses due in large part to
a decrease in the average headcount compared to the year-ago
quarter.
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:
- Q2 FY’4 fee revenue is expected to be in the
range of $675 million and $695 million; and
- Q2 FY’4 diluted earnings per share is expected
to range between $0.85 to $0.97.
On a consolidated adjusted basis:
- Q2 FY’4 adjusted diluted earnings per share is expected to be
in the range from $0.91 to $1.01.
Q2 FY’24 Earnings Per Share
Outlook
Low
High
Consolidated diluted earnings per
share
$
0.85
$
0.97
Integration/acquisition
0.08
0.06
Tax Rate Impact
(0.02
)
(0.02
)
Consolidated adjusted diluted earnings per
share(1)
$
0.91
$
1.01
______________________
(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 and relevance of 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 global and local political and or economic developments
in or affecting countries where we have operations, such as
inflation, interest rates, global slowdowns, or recessions,
competition, geopolitical tensions, shifts in global trade
patterns, changes in demand for our services as a result of
automation, dependence on and costs of attracting and retaining
qualified and experienced consultants, impact of inflationary
pressures on our profitability, our ability to maintain
relationships with customers and suppliers and retaining key
employees, maintaining our brand name and professional reputation,
potential legal liability and regulatory developments, portability
of client relationships, consolidation of or within 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, including as a result of
recent workforce, real estate, and other restructuring initiatives,
restrictions imposed by off-limits agreements, reliance on
information processing systems, cyber security vulnerabilities or
events, changes to data security, data privacy, and data protection
laws, dependence on third parties for the execution of critical
functions, limited protection of our intellectual property ("IP"),
our ability to enhance, develop and respond to new technology,
including artificial intelligence, our ability to successfully
recover from a disaster or other business continuity problems,
employment liability risk, an impairment in the carrying value of
goodwill and other intangible assets, treaties, or regulations on
our business and our Company, deferred tax assets that we may not
be able to use, our ability to develop new products and services,
changes in our accounting estimates and assumptions, the
utilization and billing rates of our consultants, seasonality, the
expansion of social media platforms, the ability to effect
acquisitions and integrate acquired businesses, including Salo,
resulting organizational changes, our indebtedness, those relating
to the ultimate magnitude and duration of any pandemic or
outbreaks. For a detailed description of risks and uncertainties
that could cause differences from our expectations, 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;
- 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, net 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 July
31,
2023
2022
(unaudited)
Fee revenue
$
699,189
$
695,903
Reimbursed out-of-pocket engagement
expenses
7,073
7,245
Total revenue
706,262
703,148
Compensation and benefits
479,881
465,626
General and administrative expenses
65,917
64,457
Reimbursed expenses
7,073
7,245
Cost of services
77,190
37,992
Depreciation and amortization
19,012
16,229
Restructuring charges, net
421
—
Total operating expenses
649,494
591,549
Operating income
56,768
111,599
Other income, net
13,577
775
Interest expense, net
(4,740
)
(7,612
)
Income before provision for income
taxes
65,605
104,762
Income tax provision
18,420
26,226
Net income
47,185
78,536
Net income attributable to noncontrolling
interest
(580
)
(1,289
)
Net income attributable to Korn Ferry
$
46,605
$
77,247
Earnings per common share attributable to
Korn Ferry:
Basic
$
0.89
$
1.46
Diluted
$
0.89
$
1.45
Weighted-average common shares
outstanding:
Basic
50,934
51,771
Diluted
51,082
52,106
Cash dividends declared per share:
$
0.18
$
0.15
KORN FERRY AND
SUBSIDIARIES
FINANCIAL SUMMARY BY REPORTING
SEGMENT
(dollars in thousands)
(unaudited)
Three Months Ended July
31,
2023
2022
% Change
Fee revenue:
Consulting
$
168,088
$
166,484
1.0
%
Digital
87,986
83,761
5.0
%
Executive Search:
North America
127,498
151,544
(15.9
)%
EMEA
46,776
47,056
(0.6
)%
Asia Pacific
24,539
26,381
(7.0
)%
Latin America
6,421
7,808
(17.8
)%
Total Executive Search (a)
205,234
232,789
(11.8
)%
Professional Search & Interim
142,179
98,947
43.7
%
RPO
95,702
113,922
(16.0
)%
Total fee revenue
699,189
695,903
0.5
%
Reimbursed out-of-pocket engagement
expenses
7,073
7,245
(2.4
)%
Total revenue
$
706,262
$
703,148
0.4
%
(a)
Total Executive Search is the sum of the
individual Executive Search Reporting Segments and is presented on
a consolidated basis as it is consistent with the Company’s
discussion of its Lines of Business, and financial metrics used by
the Company’s investor base.
KORN FERRY AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share amounts)
July 31, 2023
April 30, 2023
(unaudited)
ASSETS
Cash and cash equivalents
$
562,209
$
844,024
Marketable securities
29,486
44,837
Receivables due from clients, net of
allowance for doubtful accounts of $47,418 and $44,377 at July 31,
2023 and April 30, 2023, respectively
592,333
569,601
Income taxes and other receivables
58,443
67,512
Unearned compensation
66,878
63,476
Prepaid expenses and other assets
57,258
49,219
Total current assets
1,366,607
1,638,669
Marketable securities, non-current
189,359
179,040
Property and equipment, net
166,283
161,876
Operating lease right-of-use assets,
net
132,638
142,690
Cash surrender value of company-owned life
insurance policies, net of loans
200,103
197,998
Deferred income taxes
94,293
102,057
Goodwill
910,211
909,491
Intangible assets, net
107,979
114,426
Unearned compensation, non-current
121,918
103,607
Investments and other assets
24,077
24,590
Total assets
$
3,313,468
$
3,574,444
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable
$
50,731
$
53,386
Income taxes payable
22,868
19,969
Compensation and benefits payable
240,956
532,934
Operating lease liability, current
43,800
45,821
Other accrued liabilities
297,436
324,150
Total current liabilities
655,791
976,260
Deferred compensation and other retirement
plans
425,215
396,534
Operating lease liability, non-current
110,823
119,220
Long-term debt
396,379
396,194
Deferred tax liabilities
6,170
5,352
Other liabilities
26,560
27,879
Total liabilities
1,620,938
1,921,439
Stockholders' equity
Common stock: $0.01 par value, 150,000
shares authorized, 77,474 and 76,693 shares issued and 52,705 and
52,269 shares outstanding at July 31, 2023 and April 30, 2023,
respectively
429,093
429,754
Retained earnings
1,348,059
1,311,081
Accumulated other comprehensive loss,
net
(90,471
)
(92,764
)
Total Korn Ferry stockholders' equity
1,686,681
1,648,071
Noncontrolling interest
5,849
4,934
Total stockholders' equity
1,692,530
1,653,005
Total liabilities and stockholders'
equity
$
3,313,468
$
3,574,444
KORN FERRY AND
SUBSIDIARIES
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except
per share amounts)
(unaudited)
Three Months Ended July
31,
2023
2022
Net income attributable to Korn Ferry
$
46,605
$
77,247
Net income attributable to non-controlling
interest
580
1,289
Net income
47,185
78,536
Income tax provision
18,420
26,226
Income before provision for income
taxes
65,605
104,762
Other income, net
(13,577
)
(775
)
Interest expense, net
4,740
7,612
Operating income
56,768
111,599
Depreciation and amortization
19,012
16,229
Other income, net
13,577
775
Integration/acquisition costs (1)
4,128
3,605
Impairment of fixed assets (2)
123
—
Impairment of right of use assets (3)
1,629
—
Restructuring charges, net (4)
421
—
Adjusted EBITDA
$
95,658
$
132,208
Operating margin
8.1
%
16.0
%
Depreciation and amortization
2.7
%
2.3
%
Other income, net
2.0
%
0.1
%
Integration/acquisition costs (1)
0.6
%
0.6
%
Impairment of fixed assets (2)
—
%
—
%
Impairment of right of use assets (3)
0.2
%
—
%
Restructuring charges, net (4)
0.1
%
—
%
Adjusted EBITDA margin
13.7
%
19.0
%
Net income attributable to Korn Ferry
$
46,605
$
77,247
Integration/acquisition costs (1)
4,128
3,605
Impairment of fixed assets (2)
123
—
Impairment of right of use assets (3)
1,629
—
Restructuring charges, net (4)
421
—
Tax effect on the adjusted items (5)
(1,419
)
(893
)
Adjusted net income attributable to Korn
Ferry
$
51,487
$
79,959
Basic earnings per common share
$
0.89
$
1.46
Integration/acquisition costs (1)
0.08
0.07
Impairment of fixed assets (2)
—
—
Impairment of right of use assets (3)
0.03
—
Restructuring charges, net (4)
0.01
—
Tax effect on the adjusted items (5)
(0.02
)
(0.02
)
Adjusted basic earnings per share
$
0.99
$
1.51
Diluted earnings per common share
$
0.89
$
1.45
Integration/acquisition costs (1)
0.08
0.07
Impairment of fixed assets (2)
—
—
Impairment of right of use assets (3)
0.03
—
Restructuring charges, net (4)
0.01
—
Tax effect on the adjusted items (5)
(0.02
)
(0.02
)
Adjusted diluted earnings per share
$
0.99
$
1.50
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)
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 July
31,
2023
2022
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
Fee revenue
Total revenue
Adjusted EBITDA
Adjusted EBITDA margin
(dollars in thousands)
Consulting
$
168,088
$
170,793
$
25,180
15.0
%
$
166,484
$
168,735
$
29,550
17.7
%
Digital
87,986
88,012
24,325
27.6
%
83,761
83,815
24,178
28.9
%
Executive Search:
North America
127,498
129,413
28,756
22.6
%
151,544
152,884
43,749
28.9
%
EMEA
46,776
47,135
5,638
12.1
%
47,056
47,329
8,515
18.1
%
Asia Pacific
24,539
24,610
6,315
25.7
%
26,381
26,452
7,351
27.9
%
Latin America
6,421
6,422
1,741
27.1
%
7,808
7,809
2,617
33.5
%
Total Executive Search
205,234
207,580
42,450
20.7
%
232,789
234,474
62,232
26.7
%
Professional Search &
Interim
142,179
143,069
24,329
17.1
%
98,947
100,052
29,161
29.5
%
RPO
95,702
96,808
10,471
10.9
%
113,922
116,072
17,709
15.5
%
Corporate
—
—
(31,097
)
—
—
(30,622
)
Consolidated
$
699,189
$
706,262
$
95,658
13.7
%
$
695,903
$
703,148
$
132,208
19.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230901676355/en/
Investor Relations: Tiffany Louder, (214) 310-8407 Media: Dan
Gugler, (310) 226-2645
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