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Korn Ferry Announces Fourth Quarter and Fiscal 2020 Results of Operations

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LOS ANGELES, July 2, 2020  /PRNewswire/ --

Highlights

  • Korn Ferry reports annual fee revenue of $1,932.7 million, essentially flat year-over-year (2.2% increase on a constant currency).
  • Net income attributable to Korn Ferry was $104.9 million in FY'20 with an operating margin of 9.1% and Adjusted EBITDA of $301.0 million and Adjusted EBITDA margin of 15.6%.
  • Fee revenue was $440.5 million in Q4 FY'20, a decrease of 10% (7.9% on a constant currency) as compared to Q4 FY'19.
  • Net loss attributable to Korn Ferry was $0.8 million in Q4 FY'20, with an operating margin of 5.0%.  Adjusted EBITDA was $69.6 million in Q4 FY'20 with an Adjusted EBITDA margin of 15.8%.
  • Q4 FY'20 diluted loss per share was $0.02 compared to diluted earnings per share of $0.89 in Q4 FY'19. Adjusted diluted earnings per share was $0.60 in Q4 FY'20 compared to $0.88 in Q4 FY'19.
  • The Company ended the year with a strong liquidity position with total cash and cash equivalents and marketable securities of $863 million, and after setting aside amounts for bonus payments and deferred compensation arrangements, investable cash was $532 million.
  • The Company repurchased 0.8 million shares, using $24.4 million of cash during the quarter.  Further, the Company declared a quarterly dividend of $0.10 per share on July 1, 2020 payable on July 15, 2020 to stockholders of record on July 31, 2020.

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $440.5 million and $1,932.7 million, respectively. In addition, fourth quarter diluted loss per share was $0.02 and adjusted diluted earnings per share was $0.60. Adjusted diluted earnings per share for the fourth quarter excludes an aggregate of $33.5 million, or $0.62 per share, of restructuring charges, net due to the corona virus pandemic ("COVID-19"), and integration/acquisition costs, net of tax due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution ("acquired companies").

"During the fiscal fourth quarter we generated $441 million in fee revenue, down 10% year-over-year (7.9% at constant currency). Operating margin was 5% and Adjusted EBITDA margin was 15.8%," said Gary D. Burnison, CEO, Korn Ferry.

"As we manage our way through COVID-19, our Korn Ferry colleagues are showing their resilience by quickly pivoting to a different way of working – whether it's from home or the rapid transition to the virtual delivery of our services and solutions to clients.  I'm confident that our offerings are more relevant now than ever before," Burnison added.  "I truly feel that over the next 2 years there will be more change than in the last 10 years.  Different work needs to get done, and work needs to get done differently.  That's an opportunity for our company.  As an organizational consulting firm, Korn Ferry is committed to promoting conscious inclusion – enabling all people and their organizations to exceed their potential – and to exceed potential, people need an abundance of opportunity, development, and sponsorship.  Korn Ferry is the right firm at the right time to help organizations drive performance through change, and I have never been more proud of our company."

Selected Financial Results
(dollars in millions, except per share amounts) (a)



Fourth Quarter


Year to Date



FY'20


FY'19


FY'20


FY'19

Fee revenue


$

440.5


$

490.8


$

1,932.7


$

1,926.0

Total revenue


$

449.0


$

502.5


$

1,977.3


$

1,973.9

Operating income


$

22.2


$

62.3


$

176.0


$

140.8

Operating margin



5.0%



12.7%



9.1%



7.3%

Net (loss) income attributable to Korn Ferry


$

(0.8)


$

50.3


$

104.9


$

102.7

Basic (loss) earnings per share


$

(0.02)


$

0.90


$

1.91


$

1.84

Diluted (loss) earnings per share


$

(0.02)


$

0.89


$

1.90


$

1.81


















EBITDA Results (b):


Fourth Quarter


Year to Date







FY'20


FY'19


FY'20


FY'19

EBITDA


$

26.3


$

82.2


$

228.5


$

197.7

EBITDA margin



6.0%



16.7%



11.8%



10.3%



































Adjusted Results (c):


Fourth Quarter


Year to Date



FY'20


FY'19


FY'20


FY'19

Adjusted EBITDA (b)


$

69.6


$

82.2


$

301.0


$

311.0

Adjusted EBITDA margin (b)



15.8%



16.7%



15.6%



16.1%

Adjusted net income attributable to Korn Ferry


$

32.7


$

49.7


$

161.3


$

187.9

Adjusted basic earnings per share


$

0.60


$

0.89


$

2.94


$

3.36

Adjusted diluted earnings per share


$

0.60


$

0.88


$

2.91


$

3.31














____________________

(a)

Numbers may not total due to rounding.  

(b)

EBITDA refers to earnings before interest, taxes, depreciation, and amortization.  Adjusted EBITDA further adjusts EBITDA to exclude integration/acquisition costs, restructuring charges, net, separation costs and tradename write-offs.  EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).  

(c)

Adjusted results are non-GAAP financial measures that adjust for the following, as applicable (see attached reconciliations):  









Fourth Quarter


Year to Date







FY'20


FY'19


FY'20


FY'19

Integration/acquisition costs


$

2.8


$

—


$

12.2


$

6.7

Restructuring charges, net


$

40.5


$

—


$

58.6


$

—

Separation costs


$

—


$

—


$

1.8


$

—

Tradename write-offs


$

—


$

—


$

—


$

106.6

Debt refinancing costs


$

—


$

—


$

0.8


$

—

 

Fiscal 2020 Fourth Quarter Results

The Company reported fee revenue in Q4 FY'20 of $440.5 million, a decrease of 10% (decrease of 7.9% on a constant currency basis) compared to Q4 FY'19. The decline in fee revenue was primarily due to the impact of COVID-19 on economies around the world, partially offset by fee revenue generated by the acquired companies in the Digital segment.

Net loss attributable to Korn Ferry was $0.8 million in Q4 FY'20 as compared to net income attributable to Korn Ferry of $50.3 million in Q4 FY'19. The change from net income to a net loss attributable to Korn Ferry was primarily due to a decline in fee revenue and restructuring charges incurred in Q4 FY'20 in reaction to the impact of COVID-19, offset by decreases in compensation and benefits expense and income tax expense.

Operating margin was 5.0% in Q4 FY'20 compared to 12.7% in the year-ago quarter.  The decrease in operating margin was primarily due to restructuring charges, net associated with the impact of COVID-19 and the decline in fee revenue in Q4 FY'20.

Adjusted EBITDA margin was 15.8%, compared to 16.7% in the year-ago quarter.

Fiscal 2020 Results

The Company reported fee revenue in FY'20 of $1,932.7 million, essentially flat when compared to FY'19. Although fee revenue was essentially flat, there was a change in mix with an increase in Digital due to fee revenue generated by the acquired companies and an organic increase in RPO and Professional Search, offset by decreases in fee revenue in Executive Search and Consulting.

Net income attributable to Korn Ferry was $104.9 million in FY'20 as compared to $102.7 million in FY'19. The increase in net income attributable to Korn Ferry was primarily due to a decrease in general and administrative expenses (due to trade name write-offs in FY'19), offset by increases in restructuring charges, net and in the Company's effective income tax rate.

Operating income was $176.0 million in FY'20 with an operating margin of 9.1% compared to $140.8 million and 7.3% in FY'19. The increase in operating income was primarily due to decreases in general and administrative expenses (due to trade name write-offs in FY'19) and compensation and benefits expense, partially offset by restructuring charges incurred in FY'20 associated with the impact of COVID-19 and the acquisition of the acquired companies.

Adjusted EBITDA was $301.0 million in FY'20 with Adjusted EBITDA margin of 15.6%, compared to $311.0 million and 16.1%, respectively, in the year-ago period.  

Results by Segment
Selected Consulting Data(a)
(dollars in millions) (b)



Fourth Quarter


Year to Date



FY'20


FY'19


FY'20


FY'19

Fee revenue


$

121.0


$

144.4


$

543.1


$

568.3

Total revenue


$

123.4


$

148.7


$

557.3


$

585.9

Operating (loss) income


$

(6.6)


$

13.3


$

17.7


$

(34.1)

Operating margin



(5.4%)



9.2%



3.3%



(6.0%)














Ending number of consultants and execution staff (c)



1,671



1,881



1,671



1,881

Hours worked in thousands (d)



415


439



1,758



1,703

Average billed rate (e)


$

292


$

329


$

309


$

334


















EBITDA Results (f):


Fourth Quarter


Year to Date



FY'20


FY'19


FY'20


FY'19

EBITDA


$

(2.3)


$

18.4


$

36.6


$

(15.7)

EBITDA margin



(1.9%)



12.7%



6.7%



(2.8%)


















Adjusted Results (g):


Fourth Quarter


Year to Date







FY'20


FY'19


FY'20


FY'19

Adjusted EBITDA (f)


$

11.1


$

18.4


$

61.1


$

66.5

Adjusted EBITDA margin (f)



9.2%



12.7%



11.2%



11.7%


















____________________

(a)

In fiscal 2020, the Company changed the composition of its global segments.  Consulting segment represents the consulting business that was previously included in the Advisory segment.  Segment data for Q4 FY'19 and YTD FY'

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3.37B
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Human Resources Consulting Services
Professional, Scientific, and Technical Services
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United States of America
LOS ANGELES

About KFY

you’re looking for new pathways to drive sustainable, profitable growth. you need a sound strategy, financials, and operating model but ultimately these don’t create change – your people do. but for too long hr has offered piecemeal views of people based on inconsistent processes, technologies, and metrics. until now. korn ferry has connected the dots, allowing us to apply a holistic effort to your people.