LOS ANGELES--(BUSINESS WIRE)--Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $690.8 million and $2,762.7 million, respectively. In addition, fourth quarter diluted earnings per share was $1.24 and adjusted diluted earnings per share was $1.26.
“I am pleased with our fourth quarter results, as we generated $691 million in fee revenue,” said Gary D. Burnison, CEO, Korn Ferry. “Earnings and profitability increased year-over-year and sequentially as we delivered $112 million of Adjusted EBITDA, at a 16.3% margin, which is our fourth consecutive quarter of profitability improvement.”
“In an economic environment in which companies are fighting for growth and relevancy, our portfolio is performing as designed and the strategy is clearly working. Cyclically sensitive talent acquisition offerings are being buoyed by continued stability from our diversified offerings – particularly Consulting, complemented by Digital, which have generated solid performance. As we look to a new fiscal year, I have never been more proud of our organization – from our colleagues, expertise, IP and insights to the incredibly innovative and relevant solutions we offer to clients in a rapidly changing world.”
Selected Financial Results |
||||||||||||||||
(dollars in millions, except per share amounts) (a) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
690.8 |
|
|
$ |
730.9 |
|
|
$ |
2,762.7 |
|
|
$ |
2,835.4 |
|
|
Total revenue |
$ |
699.9 |
|
|
$ |
738.1 |
|
|
$ |
2,795.5 |
|
|
$ |
2,863.8 |
|
|
Operating income |
$ |
83.5 |
|
|
$ |
72.6 |
|
|
$ |
212.9 |
|
|
$ |
316.3 |
|
|
Operating margin |
|
12.1 |
% |
|
|
9.9 |
% |
|
|
7.7 |
% |
|
|
11.2 |
% |
|
Net income attributable to Korn Ferry |
$ |
65.2 |
|
|
$ |
47.5 |
|
|
$ |
169.2 |
|
|
$ |
209.5 |
|
|
Basic earnings per share |
$ |
1.26 |
|
|
$ |
0.91 |
|
|
$ |
3.25 |
|
|
$ |
3.98 |
|
|
Diluted earnings per share |
$ |
1.24 |
|
|
$ |
0.91 |
|
|
$ |
3.23 |
|
|
$ |
3.95 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (b): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
112.3 |
|
|
$ |
97.9 |
|
|
$ |
408.2 |
|
|
$ |
457.3 |
|
|
Adjusted EBITDA margin |
|
16.3 |
% |
|
|
13.4 |
% |
|
|
14.8 |
% |
|
|
16.1 |
% |
|
Adjusted net income attributable to Korn Ferry (c) |
$ |
65.7 |
|
|
$ |
53.0 |
|
|
$ |
224.0 |
|
|
$ |
262.2 |
|
|
Adjusted basic earnings per share (c) |
$ |
1.27 |
|
|
$ |
1.02 |
|
|
$ |
4.31 |
|
|
$ |
4.98 |
|
|
Adjusted diluted earnings per share (c) |
$ |
1.26 |
|
|
$ |
1.01 |
|
|
$ |
4.28 |
|
|
$ |
4.94 |
|
|
| ________________ | ||
(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): |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of fixed assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
1.6 |
|
|
$ |
4.4 |
|
|
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
1.6 |
|
|
$ |
5.5 |
|
|
Integration/acquisition costs |
$ |
1.8 |
|
|
$ |
5.5 |
|
|
$ |
14.9 |
|
|
$ |
14.9 |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
1.4 |
|
|
$ |
68.6 |
|
|
$ |
42.6 |
|
|
(c) |
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in FY'24 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results. |
Fiscal 2024 Fourth Quarter Results
The Company reported fee revenue in Q4 FY'24 of $690.8 million, a decrease of 5% in both actual and constant currency compared to Q4 FY'23. Moderation in fee revenue from our talent acquisition offerings was buoyed by year-over-year growth in our Consulting fee revenue and stability in our Digital fee revenue, in-line with our business diversification strategy. The moderation in fee revenue in our talent acquisition offerings was driven by the challenging global economic environment (the "economic environment").
Operating income was $83.5 million (at an operating margin of 12.1%) in Q4 FY'24, compared to $72.6 million (at an operating margin of 9.9%) in the year-ago quarter, an increase of 15% (and 220bps). Net income attributable to Korn Ferry was $65.2 million in Q4 FY'24, compared to $47.5 million in Q4 FY'23. Adjusted EBITDA was $112.3 million in Q4 FY'24 compared to $97.9 million in Q4 FY'23. Adjusted EBITDA margin was 16.3% in Q4 FY'24, an increase of 290bps.
Operating income and margin increased as a result of pro-active workforce capacity management ("workforce actions") taken during the year and the lower cost of services expense and integration/acquisition costs compared to the year-ago quarter. These increases were partially offset by the decrease in fee revenue discussed above. Net income attributable to Korn Ferry increased due to the same factors discussed above.
Adjusted EBITDA and margin increased due to the same factors discussed above, but excluded integration/acquisition costs.
Fiscal 2024 Full Year Results
The Company reported fee revenue in FY'24 of $2,762.7 million, a decrease of 3% in both actual and constant currency compared to FY'23. Fee revenue decreased primarily due to decreases in our permanent placement talent acquisition offerings, due to the economic environment. This decrease was partially offset by an increase in fee revenue from the Interim portion of Professional Search & Interim, resulting from the acquisitions of Infinity Consulting Solutions and Salo, which were acquired on August 1, 2022, and February 1, 2023, respectively, as well as year-over-year growth in Consulting and Digital fee revenue, again, in-line with our business diversification strategy.
Operating income was $212.9 million (margin of 7.7%) in FY'24, compared to $316.3 million (margin of 11.2%) in FY'23. Net income attributable to Korn Ferry was $169.2 million in FY'24 compared to $209.5 million in FY'23. Adjusted EBITDA was $408.2 million (adjusted EBITDA margin 14.8%) in FY'24 compared to $457.3 million (adjusted EBITDA margin 16.1%) in FY'23.
Operating income and margin decreased primarily due to a decrease in fee revenue from our permanent placement talent acquisition offerings, which have higher margins, an increase in Interim fee revenue (lower margins) and cost of services expense, and higher restructuring charges, net recorded during FY'24 compared to the year-ago period. These decreases were partially offset by decreases in compensation and benefits expense resulting from workforce actions taken during FY'24, and lower impairment charges of both fixed and right of use assets. Net income attributable to Korn Ferry declined due to the same factors discussed above partially offset by a lower effective tax rate in the current year.
Adjusted EBITDA and margin decreased due to the same factors as operating income discussed above excluding the restructuring charges.
Results by Line of Business |
||||||||||||||||
Selected Consulting Data |
||||||||||||||||
(dollars in millions) (a) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
182.2 |
|
|
$ |
175.3 |
|
|
$ |
695.0 |
|
|
$ |
677.0 |
|
|
Total revenue |
$ |
185.1 |
|
|
$ |
178.0 |
|
|
$ |
706.8 |
|
|
$ |
687.0 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Ending number of consultants and execution staff (b) |
|
1,678 |
|
|
|
1,853 |
|
|
|
1,678 |
|
|
|
1,853 |
|
|
Hours worked in thousands (c) |
|
417 |
|
|
|
450 |
|
|
|
1,656 |
|
|
|
1,790 |
|
|
Average bill rate (d) |
$ |
437 |
|
|
$ |
390 |
|
|
$ |
420 |
|
|
$ |
378 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (e): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
32.3 |
|
|
$ |
24.6 |
|
|
$ |
114.3 |
|
|
$ |
108.5 |
|
|
Adjusted EBITDA margin |
|
17.8 |
% |
|
|
14.0 |
% |
|
|
16.4 |
% |
|
|
16.0 |
% |
|
| ________________ | ||
(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’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of fixed assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2.8 |
|
|
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.6 |
|
|
$ |
3.1 |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
0.8 |
|
|
$ |
18.9 |
|
|
$ |
11.6 |
|
|
Fee revenue was $182.2 million in Q4 FY'24 compared to $175.3 million in Q4 FY'23, an increase of $6.9 million or 4% (up 5% on a constant currency basis). Growth was strongest in our assessment & succession solutions, leadership development, and organizational strategy offerings, with all product areas posting year-over-year increases in fee revenue. Fee revenue was also positively impacted by a year-over-year 12% increase in our average bill rate to $437 per hour.
Adjusted EBITDA increased 31% to $32.3 million compared to the fourth quarter of FY'23. Adjusted EBITDA margin in the quarter increased year-over-year by 380bps to 17.8% this year. These increases resulted primarily from higher fee revenue in the previously discussed solution areas, higher bill rates, and workforce actions taken during the year and were slightly offset by an increase in cost of services expense and higher general and administrative expenses.
Selected Digital Data |
||||||||||||||||
(dollars in millions) (a) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
91.3 |
|
|
$ |
91.5 |
|
|
$ |
366.7 |
|
|
$ |
354.7 |
|
|
Total revenue |
$ |
91.4 |
|
|
$ |
91.5 |
|
|
$ |
366.9 |
|
|
$ |
355.0 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Ending number of consultants |
|
267 |
|
|
|
347 |
|
|
|
267 |
|
|
|
347 |
|
|
Subscription & License fee revenue |
$ |
33.3 |
|
|
$ |
31.6 |
|
|
$ |
131.0 |
|
|
$ |
119.7 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (b): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
28.0 |
|
|
$ |
23.6 |
|
|
$ |
108.7 |
|
|
$ |
97.5 |
|
|
Adjusted EBITDA margin |
|
30.7 |
% |
|
|
25.8 |
% |
|
|
29.6 |
% |
|
|
27.5 |
% |
|
| ________________ | ||
(a) |
Numbers may not total due to rounding. |
|
(b) |
Adjusted results exclude the following: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of fixed assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
1.5 |
|
|
$ |
1.5 |
|
|
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1.7 |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
— |
|
|
$ |
9.5 |
|
|
$ |
2.9 |
|
|
Fee revenue was $91.3 million in Q4 FY'24 compared to $91.5 million in Q4 FY'23, flat year-over-year and up 1% on a constant currency basis.
Adjusted EBITDA was $28.0 million in Q4 FY'24 compared to $23.6 million in the year-ago quarter. Adjusted EBITDA margin in the quarter increased year-over-year by 490bps to 30.7%. The increase in Adjusted EBITDA and Adjusted EBITDA margin was mainly due to workforce actions taken during FY'24.
Selected Executive Search Data(a) |
||||||||||||||||
(dollars in millions) (b) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
198.7 |
|
|
$ |
212.6 |
|
|
$ |
806.2 |
|
|
$ |
875.8 |
|
|
Total revenue |
$ |
200.8 |
|
|
$ |
214.6 |
|
|
$ |
814.3 |
|
|
$ |
883.3 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Ending number of consultants |
|
542 |
|
|
|
602 |
|
|
|
542 |
|
|
|
602 |
|
|
Average number of consultants |
|
552 |
|
|
|
609 |
|
|
|
572 |
|
|
|
594 |
|
|
Engagements billed |
|
3,456 |
|
|
|
3,772 |
|
|
|
8,978 |
|
|
|
10,091 |
|
|
New engagements (c) |
|
1,586 |
|
|
|
1,608 |
|
|
|
6,091 |
|
|
|
6,686 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (d): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
45.5 |
|
|
$ |
42.7 |
|
|
$ |
171.1 |
|
|
$ |
205.8 |
|
|
Adjusted EBITDA margin |
|
22.9 |
% |
|
|
20.1 |
% |
|
|
21.2 |
% |
|
|
23.5 |
% |
|
| ________________ | ||
(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: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of fixed assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
$ |
— |
|
|
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.9 |
|
|
$ |
— |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
0.6 |
|
|
$ |
28.2 |
|
|
$ |
20.1 |
|
|
Fee revenue was $198.7 million and $212.6 million in Q4 FY'24 and Q4 FY'23, respectively, a decrease of $13.9 million or 7% (down 6% on a constant currency basis). The decrease in fee revenue was primarily driven by a decline in the number of Executive Search engagements billed, as a result of the current economic environment.
Adjusted EBITDA was $45.5 million in Q4 FY'24 compared to $42.7 million in the year-ago quarter. Adjusted EBITDA margin increased by 280bps to 22.9% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to workforce actions taken during the year and increased consultant productivity, partially offset by the decrease in fee revenue discussed above.
Selected Professional Search & Interim Data |
||||||||||||||||
(dollars in millions) (a) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
129.2 |
|
|
$ |
151.7 |
|
|
$ |
540.6 |
|
|
$ |
503.4 |
|
|
Total revenue |
$ |
130.1 |
|
|
$ |
152.6 |
|
|
$ |
544.5 |
|
|
$ |
507.1 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Permanent Placement: |
|
|
|
|
|
|
|
|||||||||
Fee revenue |
$ |
56.3 |
|
|
$ |
62.5 |
|
|
$ |
223.5 |
|
|
$ |
281.1 |
|
|
Engagements billed |
|
1,939 |
|
|
|
2,304 |
|
|
|
5,619 |
|
|
|
7,435 |
|
|
New engagements (b) |
|
1,086 |
|
|
|
1,364 |
|
|
|
4,500 |
|
|
|
6,486 |
|
|
Ending number of consultants |
|
331 |
|
|
|
401 |
|
|
|
331 |
|
|
|
401 |
|
|
Interim: |
|
|
|
|
|
|
|
|||||||||
Fee revenue |
$ |
72.9 |
|
|
$ |
89.2 |
|
|
$ |
317.1 |
|
|
$ |
222.3 |
|
|
Average bill rate (c) |
$ |
133 |
|
|
$ |
124 |
|
|
$ |
127 |
|
|
$ |
115 |
|
|
Average weekly billable consultants (d) |
|
1,157 |
|
|
|
1,683 |
|
|
|
1,303 |
|
|
|
1,079 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (e): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
28.1 |
|
|
$ |
27.3 |
|
|
$ |
101.9 |
|
|
$ |
110.9 |
|
|
Adjusted EBITDA margin |
|
21.8 |
% |
|
|
18.0 |
% |
|
|
18.8 |
% |
|
|
22.0 |
% |
|
| ________________ | ||
(a) |
Numbers may not total due to rounding. |
|
(b) |
Represents new engagements opened in the respective period. |
|
(c) |
Fee revenue from interim divided by the number of hours worked by consultants. |
|
(d) |
The number of billable consultants based on a weekly average in the respective period. |
|
(e) |
Adjusted results exclude the following: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of fixed assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.6 |
|
|
Integration/acquisition costs |
$ |
1.8 |
|
|
$ |
4.3 |
|
|
$ |
14.5 |
|
|
$ |
11.0 |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
— |
|
|
$ |
3.8 |
|
|
$ |
4.8 |
|
|
Fee revenue was $129.2 million in Q4 FY'24, a decrease of $22.5 million or 15% in both actual and constant currency. The decrease in fee revenue in both the Permanent Placement and Interim portions of the business resulted from the economic environment and, in the case of the Interim portion, the continued wind-down during Q4 FY’23 of a non-recurring engagement that ultimately concluded in Q1 FY’24.
Adjusted EBITDA was $28.1 million in Q4 FY'24 compared to $27.3 million in the year-ago quarter. Adjusted EBITDA margin increased year-over-year by 380bps to 21.8% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin was primarily due to the lower cost of services expense, combined with decreases in compensation and benefit and general and administrative expense (both excluding integration/acquisition costs) as a result of workforce and other cost saving actions, partially offset by the decrease in fee revenue discussed above.
Selected Recruitment Process Outsourcing ("RPO") Data |
||||||||||||||||
(dollars in millions) (a) |
||||||||||||||||
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Fee revenue |
$ |
89.5 |
|
|
$ |
99.8 |
|
|
$ |
354.1 |
|
|
$ |
424.6 |
|
|
Total revenue |
$ |
92.5 |
|
|
$ |
101.4 |
|
|
$ |
363.0 |
|
|
$ |
431.5 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Remaining revenue under contract (b) |
$ |
657.1 |
|
|
$ |
776.7 |
|
|
$ |
657.1 |
|
|
$ |
776.7 |
|
|
RPO new business (c) |
$ |
128.4 |
|
|
$ |
115.1 |
|
|
$ |
439.6 |
|
|
$ |
597.8 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Adjusted Results (d): |
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Adjusted EBITDA |
$ |
11.8 |
|
|
$ |
9.0 |
|
|
$ |
40.4 |
|
|
$ |
52.6 |
|
|
Adjusted EBITDA margin |
|
13.2 |
% |
|
|
9.0 |
% |
|
|
11.4 |
% |
|
|
12.4 |
% |
|
| ________________ | ||
(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: |
|
|
Fourth Quarter |
|
Year to Date |
|||||||||||||
|
FY’24 |
|
FY’23 |
|
FY’24 |
|
FY’23 |
|||||||||
Impairment of right of use assets |
$ |
— |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
$ |
0.1 |
|
|
Restructuring charges, net |
$ |
— |
|
|
$ |
— |
|
|
$ |
7.9 |
|
|
$ |
3.1 |
|
|
Fee revenue was $89.5 million in Q4 FY'24, a decrease of $10.3 million or 10% in both actual and constant currency. RPO fee revenue decreased due to moderation in the hiring volume in the existing base of clients due to the economic environment, a higher percentage of FY'24 new business coming from renewals and extensions versus new logos, as well as a continuation of clients' "labor hoarding" throughout the year.
Adjusted EBITDA was $11.8 million in Q4 FY'24 compared to $9.0 million in the year-ago quarter. Adjusted EBITDA margin increased 420bps to 13.2% in Q4 FY'24. The increase in Adjusted EBITDA and Adjusted EBITDA margin both resulted from the workforce actions taken during the year, partially offset by the decline in fee revenue discussed above.
Outlook
Assuming worldwide geopolitical conditions, economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:
- Q1 FY’25 fee revenue is expected to be in the range of $655 million and $675 million; and
- Q1 FY’25 diluted earnings per share is expected to range between $1.05 to $1.15.
On a consolidated adjusted basis:
- Q1 FY’25 adjusted diluted earnings per share is expected to be in the range from $1.07 to $1.17.
|
Q1 FY’25 Earnings Per Share Outlook |
|||||||
|
Low |
|
High |
|||||
|
|
|||||||
Consolidated diluted earnings per share |
$ |
1.05 |
|
|
$ |
1.15 |
|
|
Integration/acquisition costs |
|
0.03 |
|
|
0.03 |
|
||
Tax rate impact |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
Consolidated adjusted diluted earnings per share(1) |
$ |
1.07 |
|
$ |
1.17 | |||
| ________________ | ||
(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 11:00 AM (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 the investor relations 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, expected results of our business diversification strategy, 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, resulting organizational changes, our indebtedness, and 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 and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
- 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, and to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance;
- 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, 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 primarily due to a software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23, 3) impairment of right of use assets due to the decision to terminate and sublease some of our offices, 4) restructuring charges, net to align workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic and geopolitical uncertainty and 5) to exclude a $9.7 million non-recurring tax benefit from actions taken in connection with the worldwide minimum tax that resulted in the release of a valuation allowance. 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
|
|
Year Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
(unaudited) |
|
|
|
|
||||||||||
Fee revenue |
$ |
690,800 |
|
|
$ |
730,874 |
|
|
$ |
2,762,671 |
|
|
$ |
2,835,408 |
|
|
Reimbursed out-of-pocket engagement expenses |
|
9,123 |
|
|
|
7,250 |
|
|
|
32,834 |
|
|
|
28,428 |
|
|
Total revenue |
|
699,923 |
|
|
|
738,124 |
|
|
|
2,795,505 |
|
|
|
2,863,836 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Compensation and benefits |
|
454,208 |
|
|
|
491,429 |
|
|
|
1,844,164 |
|
|
|
1,901,203 |
|
|
General and administrative expenses |
|
64,724 |
|
|
|
66,130 |
|
|
|
259,039 |
|
|
|
268,458 |
|
|
Reimbursed expenses |
|
9,123 |
|
|
|
7,250 |
|
|
|
32,834 |
|
|
|
28,428 |
|
|
Cost of services |
|
68,499 |
|
|
|
81,347 |
|
|
|
300,015 |
|
|
|
238,499 |
|
|
Depreciation and amortization |
|
19,891 |
|
|
|
17,976 |
|
|
|
77,966 |
|
|
|
68,335 |
|
|
Restructuring charges, net |
|
— |
|
|
|
1,411 |
|
|
|
68,558 |
|
|
|
42,573 |
|
|
Total operating expenses |
|
616,445 |
|
|
|
665,543 |
|
|
|
2,582,576 |
|
|
|
2,547,496 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating income |
|
83,478 |
|
|
|
72,581 |
|
|
|
212,929 |
|
|
|
316,340 |
|
|
Other income, net |
|
7,122 |
|
|
|
437 |
|
|
|
30,681 |
|
|
|
5,261 |
|
|
Interest expense, net |
|
(4,686 |
) |
|
|
(5,776 |
) |
|
|
(20,968 |
) |
|
|
(25,864 |
) |
|
Income before provision for income taxes |
|
85,914 |
|
|
|
67,242 |
|
|
|
222,642 |
|
|
|
295,737 |
|
|
Income tax provision |
|
20,302 |
|
|
|
19,108 |
|
|
|
50,081 |
|
|
|
82,683 |
|
|
Net income |
|
65,612 |
|
|
|
48,134 |
|
|
|
172,561 |
|
|
|
213,054 |
|
|
Net income attributable to noncontrolling interest |
|
(423 |
) |
|
|
(640 |
) |
|
|
(3,407 |
) |
|
|
(3,525 |
) |
|
Net income attributable to Korn Ferry |
$ |
65,189 |
|
|
$ |
47,494 |
|
|
$ |
169,154 |
|
|
$ |
209,529 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings per common share attributable to Korn Ferry: |
|
|
|
|
|
|
|
|||||||||
Basic |
$ |
1.26 |
|
|
$ |
0.91 |
|
|
$ |
3.25 |
|
|
$ |
3.98 |
|
|
Diluted |
$ |
1.24 |
|
|
$ |
0.91 |
|
|
$ |
3.23 |
|
|
$ |
3.95 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|||||||||
Basic |
|
50,764 |
|
|
|
51,009 |
|
|
|
51,038 |
|
|
|
51,482 |
|
|
Diluted |
|
51,487 |
|
|
|
51,234 |
|
|
|
51,432 |
|
|
|
51,883 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash dividends declared per share: |
$ |
0.33 |
|
|
$ |
0.15 |
|
|
$ |
1.02 |
|
|
$ |
0.60 |
|
|
KORN FERRY AND SUBSIDIARIES |
||||||||||||||||||||||
FINANCIAL SUMMARY BY REPORTING SEGMENT |
||||||||||||||||||||||
(dollars in thousands) |
||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||
|
|
|
||||||||||||||||||||
|
Three Months Ended
|
Year Ended
|
||||||||||||||||||||
|
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
||||||||||||||||
Fee revenue: |
|
|
|
|
|
|
||||||||||||||||
Consulting |
$ |
182,177 |
|
$ |
175,270 |
|
3.9 |
% |
$ |
695,007 |
|
$ |
677,001 |
|
2.7 |
% |
||||||
Digital |
|
91,304 |
|
|
91,490 |
|
(0.2 |
%) |
|
366,699 |
|
|
354,651 |
|
3.4 |
% |
||||||
Executive Search: |
|
|
|
|
|
|
||||||||||||||||
North America |
|
125,468 |
|
|
135,300 |
|
(7.3 |
%) |
|
506,927 |
|
|
562,139 |
|
(9.8 |
%) |
||||||
EMEA |
|
45,643 |
|
|
46,353 |
|
(1.5 |
%) |
|
184,516 |
|
|
187,014 |
|
(1.3 |
%) |
||||||
Asia Pacific |
|
20,696 |
|
|
23,188 |
|
(10.7 |
%) |
|
85,863 |
|
|
95,598 |
|
(10.2 |
%) |
||||||
Latin America |
|
6,896 |
|
|
7,764 |
|
(11.2 |
%) |
|
28,937 |
|
|
31,047 |
|
(6.8 |
%) |
||||||
Total Executive Search (a) |
|
198,703 |
|
|
212,605 |
|
(6.5 |
%) |
|
806,243 |
|
|
875,798 |
|
(7.9 |
%) |
||||||
Professional Search & Interim |
|
129,162 |
|
|
151,725 |
|
(14.9 |
%) |
|
540,615 |
|
|
503,395 |
|
7.4 |
% |
||||||
RPO |
|
89,454 |
|
|
99,784 |
|
(10.4 |
%) |
|
354,107 |
|
|
424,563 |
|
(16.6 |
%) |
||||||
Total fee revenue |
|
690,800 |
|
|
730,874 |
|
(5.5 |
%) |
|
2,762,671 |
|
|
2,835,408 |
|
(2.6 |
%) |
||||||
Reimbursed out-of-pocket engagement expenses |
|
9,123 |
|
|
7,250 |
|
25.8 |
% |
|
32,834 |
|
|
28,428 |
|
15.5 |
% |
||||||
Total revenue |
$ |
699,923 |
|
$ |
738,124 |
|
(5.2 |
%) |
$ |
2,795,505 |
|
$ |
2,863,836 |
|
(2.4 |
%) |
||||||
(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) |
||||||||
|
|
|
|
|
||||
|
|
April 30,
|
|
April 30,
|
||||
|
|
|
|
|||||
ASSETS |
|
|
|
|||||
Cash and cash equivalents |
$ |
941,005 |
|
|
$ |
844,024 |
|
|
Marketable securities |
|
42,742 |
|
|
|
44,837 |
|
|
Receivables due from clients, net of allowance for doubtful accounts of $44,192 and $44,377 at April 30, 2024 and 2023, respectively |
|
541,014 |
|
|
|
569,601 |
|
|
Income taxes and other receivables |
|
40,696 |
|
|
|
67,512 |
|
|
Unearned compensation |
|
59,247 |
|
|
|
63,476 |
|
|
Prepaid expenses and other assets |
|
49,456 |
|
|
|
49,219 |
|
|
Total current assets |
|
1,674,160 |
|
|
|
1,638,669 |
|
|
|
|
|
|
|||||
Marketable securities, non-current |
|
211,681 |
|
|
|
179,040 |
|
|
Property and equipment, net |
|
161,849 |
|
|
|
161,876 |
|
|
Operating lease right-of-use assets, net |
|
160,464 |
|
|
|
142,690 |
|
|
Cash surrender value of company-owned life insurance policies, net of loans |
|
218,977 |
|
|
|
197,998 |
|
|
Deferred income taxes |
|
133,564 |
|
|
|
102,057 |
|
|
Goodwill |
|
908,376 |
|
|
|
909,491 |
|
|
Intangible assets, net |
|
88,833 |
|
|
|
114,426 |
|
|
Unearned compensation, non-current |
|
99,913 |
|
|
|
103,607 |
|
|
Investments and other assets |
|
21,052 |
|
|
|
24,590 |
|
|
Total assets |
$ |
3,678,869 |
|
|
$ |
3,574,444 |
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|||||
Accounts payable |
$ |
50,112 |
|
|
$ |
53,386 |
|
|
Income taxes payable |
|
24,076 |
|
|
|
19,969 |
|
|
Compensation and benefits payable |
|
525,466 |
|
|
|
532,934 |
|
|
Operating lease liability, current |
|
36,073 |
|
|
|
45,821 |
|
|
Other accrued liabilities |
|
298,792 |
|
|
|
324,150 |
|
|
Total current liabilities |
|
934,519 |
|
|
|
976,260 |
|
|
|
|
|
|
|||||
Deferred compensation and other retirement plans |
|
440,396 |
|
|
|
396,534 |
|
|
Operating lease liability, non-current |
|
143,507 |
|
|
|
119,220 |
|
|
Long-term debt |
|
396,946 |
|
|
|
396,194 |
|
|
Deferred tax liabilities |
|
4,540 |
|
|
|
5,352 |
|
|
Other liabilities |
|
21,636 |
|
|
|
27,879 |
|
|
Total liabilities |
|
1,941,544 |
|
|
|
1,921,439 |
|
|
|
|
|
|
|||||
Stockholders' equity |
|
|
|
|||||
Common stock: $0.01 par value, 150,000 shares authorized, 77,460 and 76,693 shares issued and 51,983 and 52,269 shares outstanding at April 30, 2024 and 2023, respectively |
|
414,885 |
|
|
|
429,754 |
|
|
Retained earnings |
|
1,425,844 |
|
|
|
1,311,081 |
|
|
Accumulated other comprehensive loss, net |
|
(107,671 |
) |
|
|
(92,764 |
) |
|
Total Korn Ferry stockholders' equity |
|
1,733,058 |
|
|
|
1,648,071 |
|
|
Noncontrolling interest |
|
4,267 |
|
|
|
4,934 |
|
|
Total stockholders' equity |
|
1,737,325 |
|
|
|
1,653,005 |
|
|
Total liabilities and stockholders' equity |
$ |
3,678,869 |
|
|
$ |
3,574,444 |
|
|
KORN FERRY AND SUBSIDIARIES |
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
||||||||||||||||
(dollars in thousands) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to Korn Ferry |
$ |
65,189 |
|
|
$ |
47,494 |
|
|
$ |
169,154 |
|
|
$ |
209,529 |
|
|
Net income attributable to non-controlling interest |
|
423 |
|
|
|
640 |
|
|
|
3,407 |
|
|
|
3,525 |
|
|
Net income |
|
65,612 |
|
|
|
48,134 |
|
|
|
172,561 |
|
|
|
213,054 |
|
|
Income tax provision |
|
20,302 |
|
|
|
19,108 |
|
|
|
50,081 |
|
|
|
82,683 |
|
|
Income before provision for income taxes |
|
85,914 |
|
|
|
67,242 |
|
|
|
222,642 |
|
|
|
295,737 |
|
|
Other income, net |
|
(7,122 |
) |
|
|
(437 |
) |
|
|
(30,681 |
) |
|
|
(5,261 |
) |
|
Interest expense, net |
|
4,686 |
|
|
|
5,776 |
|
|
|
20,968 |
|
|
|
25,864 |
|
|
Operating income |
|
83,478 |
|
|
|
72,581 |
|
|
|
212,929 |
|
|
|
316,340 |
|
|
Depreciation and amortization |
|
19,891 |
|
|
|
17,976 |
|
|
|
77,966 |
|
|
|
68,335 |
|
|
Other income, net |
|
7,122 |
|
|
|
437 |
|
|
|
30,681 |
|
|
|
5,261 |
|
|
Integration/acquisition costs (1) |
|
1,809 |
|
|
|
5,450 |
|
|
|
14,866 |
|
|
|
14,922 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
— |
|
|
|
1,575 |
|
|
|
4,375 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
— |
|
|
|
1,629 |
|
|
|
5,471 |
|
|
Restructuring charges, net (4) |
|
— |
|
|
|
1,411 |
|
|
|
68,558 |
|
|
|
42,573 |
|
|
Adjusted EBITDA |
$ |
112,300 |
|
|
$ |
97,855 |
|
|
$ |
408,204 |
|
|
$ |
457,277 |
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating margin |
|
12.1 |
% |
|
|
9.9 |
% |
|
|
7.7 |
% |
|
|
11.2 |
% |
|
Depreciation and amortization |
|
2.9 |
% |
|
|
2.5 |
% |
|
|
2.8 |
% |
|
|
2.4 |
% |
|
Other income, net |
|
1.0 |
% |
|
|
0.1 |
% |
|
|
1.1 |
% |
|
|
0.2 |
% |
|
Integration/acquisition costs (1) |
|
0.3 |
% |
|
|
0.7 |
% |
|
|
0.5 |
% |
|
|
0.5 |
% |
|
Impairment of fixed assets (2) |
|
— |
% |
|
|
— |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
Impairment of right of use assets (3) |
|
— |
% |
|
|
— |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
|
Restructuring charges, net (4) |
|
— |
% |
|
|
0.2 |
% |
|
|
2.5 |
% |
|
|
1.5 |
% |
|
Adjusted EBITDA margin |
|
16.3 |
% |
|
|
13.4 |
% |
|
|
14.8 |
% |
|
|
16.1 |
% |
|
|
|
|
|
|
|
|
|
|||||||||
Net income attributable to Korn Ferry |
$ |
65,189 |
|
|
$ |
47,494 |
|
|
$ |
169,154 |
|
|
$ |
209,529 |
|
|
Integration/acquisition costs (1) |
|
1,809 |
|
|
|
5,450 |
|
|
|
14,866 |
|
|
|
14,922 |
|
|
Impairment of fixed assets (2) |
|
— |
|
|
|
— |
|
|
|
1,575 |
|
|
|
4,375 |
|
|
Impairment of right of use assets (3) |
|
— |
|
|
|
— |
|
|
|
1,629 |
|
|
|
5,471 |
|
|
Restructuring charges, net (4) |
|
— |
|
|
|
1,411 |
|
|
|
68,558 |
|
|
|
42,573 |
|
|
Tax effect on the adjusted items (5) |
|
(1,267 |
) |
|
|
(1,309 |
) |
|
|
(22,030 |
) |
|
|
(14,719 |
) |
|
Tax adjustment (6) |
|
— |
|
|
|
— |
|
|
|
(9,714 |
) |
|
|
— |
|
|
Adjusted net income attributable to Korn Ferry |
$ |
65,731 |
|
|
$ |
53,046 |
|
|
$ |
224,038 |
|
|
$ |
262,151 |
|
|
| 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 primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23. |
|
(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 incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty. |
|
(5) |
Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net. |
|
(6) |
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in fiscal 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results. |
|
KORN FERRY AND SUBSIDIARIES |
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
|
|
|
|
|
||||||||||||
Basic earnings per common share |
$ |
1.26 |
|
$ |
0.91 |
|
$ |
3.25 |
|
$ |
3.98 |
|
||||
Integration/acquisition costs (1) |
|
0.04 |
|
|
0.11 |
|
|
0.29 |
|
|
0.29 |
|
||||
Impairment of fixed assets (2) |
|
— |
|
|
— |
|
|
0.03 |
|
|
0.08 |
|
||||
Impairment of right of use assets (3) |
|
— |
|
|
— |
|
|
0.03 |
|
|
0.10 |
|
||||
Restructuring charges, net (4) |
|
— |
|
|
0.03 |
|
|
1.33 |
|
|
0.82 |
|
||||
Tax effect on the adjusted items (5) |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.43 |
) |
|
(0.29 |
) |
||||
Tax adjustment (6) |
|
— |
|
|
— |
|
|
(0.19 |
) |
|
— |
|
||||
Adjusted basic earnings per share |
$ |
1.27 |
|
$ |
1.02 |
|
$ |
4.31 |
|
$ |
4.98 |
|
||||
|
|
|
|
|
||||||||||||
Diluted earnings per common share |
$ |
1.24 |
|
$ |
0.91 |
|
$ |
3.23 |
|
$ |
3.95 |
|
||||
Integration/acquisition costs (1) |
|
0.04 |
|
|
0.10 |
|
|
0.29 |
|
|
0.28 |
|
||||
Impairment of fixed assets (2) |
|
— |
|
|
— |
|
|
0.03 |
|
|
0.08 |
|
||||
Impairment of right of use assets (3) |
|
— |
|
|
— |
|
|
0.03 |
|
|
0.10 |
|
||||
Restructuring charges, net (4) |
|
— |
|
|
0.03 |
|
|
1.32 |
|
|
0.82 |
|
||||
Tax effect on the adjusted items (5) |
|
(0.02 |
) |
|
(0.03 |
) |
|
(0.43 |
) |
|
(0.29 |
) |
||||
Tax adjustment (6) |
|
— |
|
|
— |
|
|
(0.19 |
) |
|
— |
|
||||
Adjusted diluted earnings per share |
$ |
1.26 |
|
$ |
1.01 |
|
$ |
4.28 |
|
$ |
4.94 |
|
||||
| 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 primarily due to software impairment charge in our Digital segment in FY'24 and impairment on leasehold improvements due to terminating and deciding to sublease some of our office leases in FY'23. |
|
(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 incurred to align our workforce to the challenging macroeconomic business environment arising from persistent inflationary pressures, rising interest rates and global economic geopolitical uncertainty. |
|
(5) |
Tax effect on integration/acquisition costs, impairment of fixed assets and right of use assets, and restructuring charges, net. |
|
(6) |
Due to actions taken in connection with the worldwide minimum tax, the Company recorded a $9.7 million non-recurring tax benefit in fiscal 2024 that resulted in the release of a valuation allowance, which is included in the Company's US GAAP results but excluded from the Adjusted results. |
|
KORN FERRY AND SUBSIDIARIES |
||||||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - CONTINUED |
||||||||||||||||||||||||||||||
(unaudited) |
||||||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||
|
|
Three Months Ended April 30, |
||||||||||||||||||||||||||||
|
|
2024 |
|
2023 |
||||||||||||||||||||||||||
|
|
Fee
|
|
Total
|
|
Adjusted
|
|
Adjusted
|
|
Fee
|
|
Total
|
|
Adjusted
|
|
Adjusted
|
||||||||||||||
|
|
(dollars in thousands) |
||||||||||||||||||||||||||||
Consulting |
$ |
182,177 |
|
$ |
185,130 |
|
$ |
32,340 |
|
17.8 |
% |
$ |
175,270 |
|
$ |
177,985 |
|
$ |
24,558 |
|
14.0 |
% |
||||||||
Digital |
|
91,304 |
|
|
91,361 |
|
|
27,991 |
|
30.7 |
% |
|
91,490 |
|
|
91,488 |
|
|
23,603 |
|
25.8 |
% |
||||||||
Executive Search: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
North America |
|
125,468 |
|
|
127,140 |
|
|
33,136 |
|
26.4 |
% |
|
135,300 |
|
|
136,926 |
|
|
28,686 |
|
21.2 |
% |
||||||||
EMEA |
|
45,643 |
|
|
45,931 |
|
|
6,846 |
|
15.0 |
% |
|
46,353 |
|
|
46,671 |
|
|
6,803 |
|
14.7 |
% |
||||||||
Asia Pacific |
|
20,696 |
|
|
20,819 |
|
|
4,233 |
|
20.5 |
% |
|
23,188 |
|
|
23,287 |
|
|
5,499 |
|
23.7 |
% |
||||||||
Latin America |
|
6,896 |
|
|
6,906 |
|
|
1,275 |
|
18.5 |
% |
|
7,764 |
|
|
7,765 |
|
|
1,684 |
|
21.7 |
% |
||||||||
Total Executive Search |
|
198,703 |
|
|
200,796 |
|
|
45,490 |
|
22.9 |
% |
|
212,605 |
|
|
214,649 |
|
|
42,672 |
|
20.1 |
% |
||||||||
Professional Search & Interim |
|
129,162 |
|
|
130,105 |
|
|
28,122 |
|
21.8 |
% |
|
151,725 |
|
|
152,628 |
|
|
27,292 |
|
18.0 |
% |
||||||||
RPO |
|
89,454 |
|
|
92,531 |
|
|
11,782 |
|
13.2 |
% |
|
99,784 |
|
|
101,374 |
|
|
9,026 |
|
9.0 |
% |
||||||||
Corporate |
|
— |
|
|
— |
|
|
(33,425 |
) |
|
|
— |
|
|
— |
|
|
(29,296 |
) |
|
||||||||||
Consolidated |
$ |
690,800 |
|
$ |
699,923 |
|
$ |
112,300 |
|
16.3 |
% |
$ |
730,874 |
|
$ |
738,124 |
|
$ |
97,855 |
|
13.4 |
% |
||||||||
|
Year Ended April 30, |
|||||||||||||||||||||||||||||
|
2024 |
|
2023 |
|||||||||||||||||||||||||||
|
Fee
|
|
Total
|
|
Adjusted
|
|
Adjusted
|
|
Fee
|
|
Total
|
|
Adjusted
|
|
Adjusted
|
|||||||||||||||
|
(dollars in thousands) |
|||||||||||||||||||||||||||||
Consulting |
$ |
695,007 |
|
$ |
706,805 |
|
$ |
114,260 |
|
16.4 |
% |
$ |
677,001 |
|
$ |
686,979 |
|
$ |
108,502 |
|
16.0 |
% |
||||||||
Digital |
|
366,699 |
|
|
366,924 |
|
|
108,669 |
|
29.6 |
% |
|
354,651 |
|
|
354,967 |
|
|
97,458 |
|
27.5 |
% |
||||||||
Executive Search: |
|
|
|
|
|
|
|
|
||||||||||||||||||||||
North America |
|
506,927 |
|
|
513,545 |
|
|
120,710 |
|
23.8 |
% |
|
562,139 |
|
|
568,212 |
|
|
140,850 |
|
25.1 |
% |
||||||||
EMEA |
|
184,516 |
|
|
185,552 |
|
|
25,902 |
|
14.0 |
% |
|
187,014 |
|
|
188,114 |
|
|
31,380 |
|
16.8 |
% |
||||||||
Asia Pacific |
|
85,863 |
|
|
86,273 |
|
|
18,923 |
|
22.0 |
% |
|
95,598 |
|
|
95,956 |
|
|
24,222 |
|
25.3 |
% |
||||||||
Latin America |
|
28,937 |
|
|
28,956 |
|
|
5,571 |
|
19.3 |
% |
|
31,047 |
|
|
31,054 |
|
|
9,370 |
|
30.2 |
% |
||||||||
Total Executive Search |
|
806,243 |
|
|
814,326 |
|
|
171,106 |
|
21.2 |
% |
|
875,798 |
|
|
883,336 |
|
|
205,822 |
|
23.5 |
% |
||||||||
Professional Search & Interim |
|
540,615 |
|
|
544,453 |
|
|
101,868 |
|
18.8 |
% |
|
503,395 |
|
|
507,058 |
|
|
110,879 |
|
22.0 |
% |
||||||||
RPO |
|
354,107 |
|
|
362,997 |
|
|
40,399 |
|
11.4 |
% |
|
424,563 |
|
|
431,496 |
|
|
52,588 |
|
12.4 |
% |
||||||||
Corporate |
|
— |
|
|
— |
|
|
(128,098 |
) |
|
|
— |
|
|
— |
|
|
(117,972 |
) |
|
||||||||||
Consolidated |
$ |
2,762,671 |
|
$ |
2,795,505 |
|
$ |
408,204 |
|
14.8 |
% |
$ |
2,835,408 |
|
$ |
2,863,836 |
|
$ |
457,277 |
|
16.1 |
% |
||||||||