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Exhibit 99.1

For Immediate Release

Contacts:

Investor Relations: Gregg Kvochak, (310) 556-8550

For Media: Dan Gugler, (310) 226-2645

Korn Ferry International Announces Third Quarter Fiscal 2016 Results of Operations

Highlights

 

    Korn Ferry reports record fee revenue. Fee revenue was $344.2 million on a U.S. GAAP basis and $350.1 million on an adjusted basis (includes $5.9 million in deferred revenue adjustment related to the Hay Group acquisition).

 

    Excluding legacy Hay Group, fee revenue was $272.3 million, an increase of 14.0% on a constant currency basis (9.1% at actual exchange rates) from Q3 FY’15. The increase was driven by continued strong performance in the North America region of Executive Recruitment (20.9% on a constant currency basis) and the Futurestep segment (23.7% on a constant currency basis).

 

    Legacy Hay Group produced an Adjusted EBITDA margin of 11.0% on a standalone basis. Combined with the legacy Leadership & Talent Consulting segment, the new combined Hay Group segment produced an Adjusted EBITDA margin of 15.6% in Q3 FY’16. Korn Ferry consolidated Adjusted EBITDA margin was 13.6% in Q3 FY’16.

 

    Q3 FY’16 diluted loss per share was $0.30. Adjusted diluted earnings per share was $0.52 in Q3 FY’16, excluding $58.3 million of restructuring charges, integration/acquisition and separation costs, and a deferred revenue adjustment related to the Hay Group acquisition, compared to diluted earnings per share of $0.46 in Q3 FY’15.

 

    The Company declared a quarterly dividend of $0.10 per share on March 8, 2016, payable on April 15, 2016 to stockholders of record on March 25, 2016.

Los Angeles, CA, March 9, 2016 – Korn/Ferry International (NYSE: KFY), the preeminent global people and organizational advisory firm, today announced third quarter fee revenue of $344.2 million and adjusted diluted earnings per share of $0.52, excluding $58.3 million of items described above. On a GAAP basis, diluted loss per share was $0.30 in the three months ended January 31, 2016.

“Despite the threat of economic contagion at the beginning of this calendar year, I am pleased to report 14% year over year growth in fee revenue at constant currency in our third fiscal quarter – excluding the legacy Hay Group business. Combined, adjusted fee revenue for the quarter was $350 million,” said Gary D. Burnison, CEO, Korn Ferry.

“We have successfully completed the initial synergy phase of our combination with Hay Group, which is partially reflected in the new combined Hay Group segment Adjusted EBITDA margin of 15.6% in the quarter. Over the last few weeks, we have launched phase two of our Hay Group unification, which incorporates growth areas such as the expansion of our intellectual property, solutions and offerings. Our intent is to substantially complete the last phase of our integration activities by July 31, 2016, which will be eight months from the closing date of the transaction.

“After a short 90 days with Hay Group, I am more confident than ever that we are creating the preeminent global people and organizational advisory firm,” Burnison added.


Hay Group Integration

The acquisition of Hay Group was completed on December 1, 2015. In the seasonally weaker months of December and January, legacy Hay Group generated approximately $77.8 million of adjusted fee revenue, or $71.9 million, excluding the deferred revenue adjustment of $5.9 million related to the acquisition. Also, in the third quarter, we completed a number of restructuring actions targeted at improving the Hay Group’s cost base through the elimination of redundant positions and, to a lesser extent, the consolidation of a number of offices. These actions resulted in charges of $30.6 million and due to the timing, savings were only partially realized in the quarter and resulted in an Adjusted EBITDA margin of 11% for legacy Hay Group. When combined with the legacy Leadership & Talent Consulting segment, Adjusted EBITDA margin was 15.6%.

In the fourth quarter of FY’16, we estimate that legacy Hay Group will generate approximately $115 million to $119 million of adjusted fee revenue with an Adjusted EBITDA margin of 12% to 13%(1) as the business continues to benefit from the third quarter restructuring actions. When combined with our legacy Leadership & Talent Consulting business, the FY’16 fourth quarter Adjusted EBITDA margin for the new Hay Group segment is expected to range from 15.5% to 16%. Exiting the fourth quarter of FY’16, we expect the new Hay Group segment to realize the full benefit of the third quarter restructuring actions at which point, the Adjusted EBITDA margin is estimated to be 16% to 17%. These estimates are subject to the assumptions set forth in the “Outlook” section below.

The integration of Hay Group is an on-going effort and will include the future additional consolidation of office space and the elimination of other redundant operational and general and administrative expenses. We expect the majority of these restructuring actions to take place in the first quarter of FY’17. We estimate the cost of these actions to be in the range of $20 million to $26 million, resulting in incremental annualized savings of approximately $17 million to $23 million, of which approximately $15 million to $20 million expected to be realized by the new Hay Group segment.

 

(1)

 

     Q4 FY’16
Legacy Hay Group
Adjusted EBITDA Margin
and EBITDA Margin
 
         Low             High      

Legacy Hay Group Adjusted EBITDA margin

     12.0     13.0

Legacy Hay Group deferred revenue adjustment

     (5.2     (4.9

Integration/acquisition costs

     (7.2     (5.1

Restructuring costs

     (1.7     (0.8

Retention bonuses

     (3.6     (3.3
  

 

 

   

 

 

 

Hay Group EBITDA Margin

     (5.7 )%      (1.1 )% 
  

 

 

   

 

 

 


Selected Financial Results

(dollars in millions, except per share amounts)

 

     Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 344.2      $ 249.5      $ 892.2      $ 756.4   

Total revenue

   $ 358.9      $ 258.9      $ 929.6      $ 783.9   

Operating (loss) income

   $ (14.1   $ 32.9      $ 47.8      $ 85.9   

Operating margin

     (4.1 )%      13.2     5.4     11.4

Net (loss) income

   $ (16.0   $ 23.0      $ 25.1      $ 62.9   

Basic (loss) earnings per share

   $ (0.30   $ 0.46      $ 0.49      $ 1.27   

Diluted (loss) earnings per share

   $ (0.30   $ 0.46      $ 0.48      $ 1.25   
EBITDA Results (a):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA

   $ (10.6   $ 39.1      $ 64.4      $ 111.1   

EBITDA margin

     (3.1 )%      15.7     7.2     14.7
Adjusted Results (b):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 350.1      $ 249.5      $ 898.1      $ 756.4   

EBITDA (a)

   $ 47.7      $ 39.1      $ 135.4      $ 121.0   

EBITDA margin (a)

     13.6     15.7     15.1     16.0

Net income

   $ 28.8      $ 23.0      $ 78.1      $ 69.9   

Basic earnings per share

   $ 0.53      $ 0.46      $ 1.51      $ 1.41   

Diluted earnings per share

   $ 0.52      $ 0.46      $ 1.50      $ 1.39   

 

(a) EBITDA refers to earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to exclude restructuring charges (recoveries), net, integration/acquisition costs, and includes the deferred revenue adjustment related to the Hay Group acquisition and separation costs. EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).
(b) Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):

 

                                                           
     Third Quarter      Year to Date  
     FY’16      FY’15      FY’16      FY’15  

Deferred revenue adjustment related to the Hay Group acquisition

   $ 5.9       $ —         $ 5.9       $ —     

Restructuring charges (recoveries), net

   $   30.6       $ (0.4    $ 30.6       $ 9.5   

Integration/acquisition costs

   $ 21.1       $     0.4       $   33.8       $   0.4   

Separation costs

   $ 0.7       $ —         $ 0.7       $ —     

Adjusted fee revenue was $350.1 million in Q3 FY’16 (including $5.9 million in deferred revenue adjustment related to the Hay Group acquisition), $344.2 million on a U.S. GAAP basis. Excluding fee revenue related to the Hay Group acquisition, fee revenue was $272.3 million, an increase of $34.9 million, or 14.0%, on a constant currency basis ($22.8 million, or 9.1%, at actual exchange rates) from Q3 FY’15. The increase was primarily due to increases in fee revenue in the North America region of Executive Recruitment and the Futurestep segment, as well as from Pivot Leadership which was acquired on March 1, 2015.

Compensation and benefit expenses were $242.4 million in Q3 FY’16, an increase of $77.7 million, or 47.2%, compared to the year-ago quarter. The increase was primarily driven by the acquisition of


Hay Group which contributed $50.9 million in compensation and benefit expenses in Q3 FY’16. The rest of the change is primarily due to integration/acquisition costs of $11.9 million related to the Hay Group acquisition and higher salaries and related payroll taxes of $11.4 million due to a 13.1% increase in the average headcount (excluding legacy Hay Group) in Q3 FY’16 compared to Q3 FY’15.

General and administrative expenses were $57.4 million in Q3 FY’16, an increase of $20.6 million compared to Q3 FY’15. The increase was primarily driven by the acquisition of Hay Group which contributed $12.3 million in general and administrative expenses in Q3 FY’16. The rest of the change was driven by integration/acquisition costs of $9.2 million related to the Hay acquisition that were incurred in Q3 FY’16.

In addition to the previously discussed restructuring charges, during the quarter, the Company spent $21.1 million on integration/acquisition costs, which included legal and professional fees associated with the close of transaction and the integration of the operations of Hay Group.

Adjusted EBITDA was $47.7 million in Q3 FY’16, an increase of $8.6 million, or 22.0%, compared to Q3 FY’15. Adjusted EBITDA margin was 13.6% in Q3 FY’16 and 15.7% in Q3 FY’15. Excluding Adjusted EBITDA of $8.6 million for the legacy Hay acquisition, Adjusted EBITDA was flat compared to the year-ago quarter. The market movements in our marketable securities, CSV of COLI and deferred compensation negatively impacted our Adjusted EBITDA by $3.3 million or 100 basis points in the three months ended January 31, 2016.

On a GAAP basis, operating loss was $14.1 million in Q3 FY’16, compared to operating income of $32.9 million in Q3 FY’15, resulting in an operating margin of (4.1)% in Q3 FY’16 compared to 13.2% in the year-ago quarter. The decrease in operating income was due to $52.4 million of restructuring charges, integration/acquisition costs and separation costs.

Balance Sheet and Liquidity

Cash and marketable securities were $343.3 million at January 31, 2016, compared to $525.4 million at April 30, 2015. Cash and marketable securities decreased by $182.1 million from April 30, 2015, primarily due to the payment of the cash consideration for the acquisition of Hay Group on December 1, 2015, Q1 FY’16 payments of FY’15 annual bonuses and $16.1 million in dividend payments made to stockholders during the year, partially offset by $150 million in cash borrowed from the Company’s term loan facility and cash provided by operating activities. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $80.9 million and $235.6 million at January 31, 2016 and April 30, 2015, respectively. As of January 31, 2016 and April 30, 2015, we held $104.9 million and $143.4 million, respectively, of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and bonuses.

The Company declared a quarterly dividend of $0.10 per share on March 8, 2016, payable on April 15, 2016 to stockholders of record on March 25, 2016.


Results by Segment

Selected Executive Recruitment Data

(dollars in millions)

 

     Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 154.6      $ 143.4      $ 463.2      $ 440.8   

Total revenue

   $ 159.6      $ 149.0      $ 479.1      $ 457.6   

Operating income

   $ 34.6      $ 33.6      $ 108.7      $ 87.7   

Operating margin

     22.4     23.4     23.5     19.9

Ending number of consultants

     492        444        492        444   

Average number of consultants

     493        442        472        438   

Engagements billed

     2,975        3,050        6,440        6,458   

New engagements (a)

     1,302        1,260        4,054        3,783   
EBITDA Results (b):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA

   $ 35.7      $ 35.2      $ 113.2      $ 93.6   

EBITDA margin

     23.0     24.5     24.4     21.2
Adjusted Results (c):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA (b)

   $ 43.0      $ 35.1      $ 120.5      $ 99.0   

EBITDA margin (b)

     27.7     24.4     26.0     22.4

 

(a) Represents new engagements opened in the respective period.
(b) 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 exclude the following (see attached reconciliations):

 

                                                           
     Third Quarter      Year to Date  
     FY’16      FY’15      FY’16      FY’15  

Restructuring charges (recoveries), net

   $ 7.3       $ (0.1    $ 7.3       $ 5.4   

Executive Recruitment

Fee revenue was $154.6 million in Q3 FY’16, an increase of $11.2 million, or 7.8% ($18.3 million, or 12.8% on a constant currency basis), compared to Q3 FY’15. The overall increase in fee revenue was primarily attributable to a 10.6% increase in the weighted-average fees billed per engagement in Q3 FY’16 compared to Q3 FY’15. On a constant currency basis, all regions, with the exception of Asia Pacific, experienced year-over-year growth with North America at 20.9%, South America at 9.1%, and EMEA at 4.6%.

Adjusted EBITDA was $43.0 million and $35.1 million during Q3 FY’16 and Q3 FY’15, respectively. The increase in Adjusted EBITDA was driven by higher fee revenue and decreases in general and administrative expenses, partially offset by increases in compensation and benefit expenses due to higher salaries and related payroll taxes and an increase in performance related bonus expense in Q3 FY’16 compared to Q3 FY’15. The decrease in general and administrative expenses was due to lower legal and professional fees in Q3 FY’16 compared to the year-ago quarter.

Operating income was $34.6 million in Q3 FY’16, an increase of $1.0 million, or 3.0%, compared to Q3 FY’15, resulting in operating margin of 22.4% in Q3 FY’16 compared to 23.4% in Q3 FY’15. Operating income was impacted by all of the above items as well as restructuring charges of $7.3 million incurred in Q3 FY’16 compared to restructuring recoveries of $0.1 million in Q3 FY’15.


Selected Hay Group Data

(dollars in millions)

 

                                                       
     Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 140.6      $ 64.4      $ 283.4      $ 194.3   

Total revenue

   $ 146.1      $ 66.0      $ 293.5      $ 199.9   

Operating (loss) income

   $ (21.6   $ 8.6      $ (6.3   $ 19.8   

Operating margin

     (15.3 )%      13.3     (2.2 )%      10.2

Ending number of consultants (a)

     183        140        183        140   

Staff utilization (b)

     62     65     65     70
EBITDA Results (c):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA

   $ (14.7   $ 11.7      $ 7.0      $ 29.5   

EBITDA margin

     (10.5 )%      18.3     2.5     15.2
Adjusted Results (d):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 146.5      $ 64.4      $ 289.3      $ 194.3   

EBITDA (c)

   $ 22.8      $ 11.7      $ 48.2      $ 32.3   

EBITDA margin (c)

     15.6     18.3     16.7     16.6

 

(a) Represents number of employees originating consulting services in legacy Leadership & Talent Consulting. We are in process of mapping legacy Hay Group personnel to our existing job categories and will include them in future periods upon completion of the mapping.
(b) Calculated by dividing the number of hours our full-time Hay Group professional staff record to engagements during the period, by the total available working hours during the same period.
(c) EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).
(d) Adjusted results are non-GAAP financial measures that adjust for the following (see attached reconciliations):

 

                                                                   
     Third Quarter      Year to Date  
     FY’16      FY’15      FY’16      FY’15  

Deferred revenue adjustment related to the Hay Group acquisition

   $ 5.9       $ —         $ 5.9       $ —     

Restructuring charges, net

   $ 23.2       $ —         $ 23.2       $ 2.8   

Integration/acquisition costs

   $ 8.4       $ —         $ 12.1       $ —     

Hay Group

Fee revenue was $146.5 million on an adjusted basis, $140.6 million on a U.S. GAAP basis in Q3 FY’16, an increase of $76.2 million on a U.S GAAP basis from the year-ago quarter. The acquisition of Hay Group contributed $77.8 million in fee revenue on an adjusted basis, $71.9 million on a U.S. GAAP basis in Q3 FY’16. The rest of the change is primarily attributed to $4.9 million of fee revenue from Pivot Leadership.

Adjusted EBITDA was $22.8 million during Q3 FY’16, an increase of $11.1 million, or 94.9%, compared to Q3 FY’15. Adjusted EBITDA margin was 15.6% in Q3 FY’16 and 18.3% in Q3 FY’15. The decrease in Adjusted EBITDA margin was due to the inclusion of legacy Hay Group results, which generated an Adjusted EBITDA margin of 11.0%.


Operating loss was $21.6 million in Q3 FY’16, compared to operating income of $8.6 million in Q3 FY’15, resulting in an operating margin of (15.3)% in the current quarter compared to 13.3% in the year-ago quarter. The decrease in operating income was due to $31.6 million of restructuring charges and integration/acquisition costs.

Selected Futurestep Data

(dollars in millions)

 

     Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

Fee revenue

   $ 49.0      $ 41.7      $ 145.6      $ 121.3   

Total revenue

   $ 53.2      $ 43.9      $ 157.0      $ 126.4   

Operating income

   $ 6.6      $ 5.8      $ 19.7      $ 14.4   

Operating margin

     13.5     13.8     13.5     11.8

Engagements billed (a)

     824        743        1,718        1,532   

New engagements (b)

     435        373        1,366        1,150   
EBITDA Results (c):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA

   $ 7.3      $ 6.3      $ 21.6      $ 15.8   

EBITDA margin

     14.9     14.9     14.8     13.0
Adjusted Results (d):    Third Quarter     Year to Date  
     FY’16     FY’15     FY’16     FY’15  

EBITDA (c)

   $ 7.3      $ 6.0      $ 21.6      $ 16.9   

EBITDA margin (c)

     14.9     14.3     14.8     13.9

 

(a) Represents search engagements billed.
(b) Represents new search engagements opened in the respective period.
(c) EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures (see attached reconciliations).
(d) Adjusted results are non-GAAP financial measures that exclude the following (see attached reconciliations):

 

     Third Quarter     Year to Date  
     FY’16     FY’15       FY’16          FY’15    

Restructuring charges (recoveries), net

   $  —          $ (0.3 )       $ —          $ 1.1     

Futurestep

Fee revenue was $49.0 million in Q3 FY’16, an increase of $7.3 million, or 17.5% ($9.9 million, or 23.7% on a constant currency basis), compared to the year-ago quarter. The higher fee revenue was driven by a $5.7 million increase in recruitment process outsourcing in Q3 FY’16 compared to Q3 FY’15. The rest of the increase was due to higher fee revenue of $2.0 million in professional search due to a 10.9% increase in engagements billed in Q3 FY’16 compared to Q3 FY’15.

Adjusted EBITDA was $7.3 million during Q3 FY’16, an increase of $1.3 million, or 21.7%, compared to Q3 FY’15, due primarily to the increase in fee revenue, partially offset by higher compensation and benefit expenses of $4.8 million driven by higher salaries and related payroll taxes as a result of a 34.3% increase in average headcount in Q3 FY’16 compared to the year-ago quarter.


Operating income was $6.6 million in Q3 FY’16, an increase of $0.8 million, compared to Q3 FY’15, resulting in an operating margin of 13.5% in the current quarter compared to 13.8% in the year-ago quarter. Operating income was impacted by the items discussed above.

Outlook

Assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated adjusted basis:

 

    Q4 FY’16 adjusted fee revenue is expected to be in the range of $385 million and $405 million; and

 

    Q4 FY’16 adjusted diluted earnings per share is likely to range from $0.50 to $0.58.

On a consolidated basis, measured by U.S. GAAP:

 

    Q4 FY’16 fee revenue is expected to be in the range of $379 million and $399 million; and

 

    Q4 FY’16 diluted earnings per share is likely to range between $0.11 to $0.26.

 

    Q4 FY’16
Fee Revenue
Outlook(1)
        Q4 FY’16
Earnings Per Share
Outlook(2)
 
    Low     High         Low     High  
    (in millions)                  

Korn Ferry consolidated adjusted fee revenue

  $ 385      $ 405     

Adjusted consolidated diluted earnings per share

  $ 0.50      $ 0.58   

Legacy Hay Group deferred revenue adjustment

    (6     (6  

Legacy Hay Group deferred revenue adjustment

    (0.07     (0.07
 

 

 

   

 

 

       

Korn Ferry consolidated US GAAP fee revenue

  $ 379      $ 399     

Integration/ acquisition costs

    (0.10     (0.07
 

 

 

   

 

 

       
     

Restructuring charges

    (0.02     (0.01
     

Retention bonuses

    (0.05     (0.05
     

Venezuela exchange rate

    (0.14     (0.11
     

Tax rate impact

    (0.01     (0.01
       

 

 

   

 

 

 
     

Consolidated US GAAP diluted earnings per share

  $ 0.11      $ 0.26   
       

 

 

   

 

 

 

 

(1) Korn Ferry consolidated adjusted fee revenue is a non-GAAP financial measure that excludes the deferred revenue adjustment relating to Hay Group.
(2) Adjusted consolidated diluted earnings per share is a non-GAAP financial measure that excludes the items listed below in the table above.

Additionally, in connection with the recently announced devaluation of the Venezuelan currency, the Company expects to take a non-cash charge of $9 million to $12 million.

Earnings Conference Call Webcast

The earnings conference call will be held today at 7:30 AM (EST) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak. The conference call will be webcast and available online at www.kornferry.com, accessible through the Investor Relations section. 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 the preeminent global people and organizational advisory firm. We help leaders, organizations and societies succeed by releasing the full power and potential of people. Our nearly 7,000 colleagues deliver services through Korn Ferry and our Hay Group and Futurestep divisions. Visit www.kornferry.com for more information.


Forward-Looking Statements

Statements in this press release and our conference call that relate to future results and events (“forward-looking statements”) are based on Korn Ferry’s current expectations. These statements, which include words such as “believes”, “expects” or “likely”, include references to our outlook. Readers are cautioned not to place undue reliance on such statements. 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 competition, the dependence on attracting and retaining qualified and experienced consultants, our ability to successfully integrate acquired businesses including Hay Group, our ability to recognize the anticipated benefits of the acquisition of Hay Group which may be affected by, among other things, competition, our ability to grow and manage growth profitability, maintain relationships with customers and suppliers and retain key employees, costs related to the acquisition of Hay Group, maintaining our brand name and professional reputation, potential legal liability, the portability of client relationships, global and local political or economic developments in or affecting countries where we have operations, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure with our growth, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, consolidation of industries we serve, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, impairment of goodwill and other intangible assets, deferred tax assets, seasonality, our ability to successfully rationalize our cost structure 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, adjusted to exclude restructuring charges, integration/acquisition costs, separation costs and includes the deferred revenue adjustment related to the Hay Group acquisition, net of income tax effect;

 

    adjusted basic and diluted earnings per share, adjusted to exclude restructuring charges, integration/acquisition costs, separation costs and includes the deferred revenue adjustment related to the Hay Group acquisition, net of income tax effect; and in the case of the outlook section, also adjusted for Venezuelan exchange rate and tax rate impact;

 

    constant currency amounts that represent the outcome that would have resulted had exchange rates in the reported period been the same as those in effect in the comparable prior year period;

 

    EBITDA, or earnings before interest, taxes, depreciation and amortization and EBITDA margin;

 

    Adjusted EBITDA, which is EBITDA further adjusted to exclude restructuring charges, integration/acquisition costs, separation costs and includes the deferred revenue adjustment related to the Hay Group acquisition, and Adjusted EBITDA margin;


    Legacy Hay Group EBITDA, which is EBITDA (as described above) for legacy Hay Group, and legacy Hay Group Adjusted EBITDA, which is Adjusted EBITDA (as described above) for legacy Hay Group, further adjusted to include the deferred revenue adjustment relating to the Hay Group acquisition;

 

    Consolidated adjusted fee revenue, which includes the deferred revenue adjustment relating to the Hay Group acquisition; and

 

    Legacy Hay Group adjusted fee revenue, which includes the deferred revenue adjustment relating to the Hay Group acquisition.

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 and other items that may not be indicative of Korn Ferry’s ongoing operating results. The use of these non-GAAP financial measures facilitate comparisons to Korn Ferry’s historical performance. Korn Ferry includes these 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. In the case of constant currency amounts, management believes the presentation of such information provides meaningful 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. In the case of legacy Hay Group results, management believes the presentation of such information provides investors with greater visibility into the impact of the Hay Group acquisition without regard to incremental charges and transaction costs.

[Tables attached]


KORN FERRY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

    Three Months Ended     Nine Months Ended  
    January 31,     January 31,  
    2016     2015     2016     2015  
    (unaudited)  

Fee revenue

  $ 344,158      $ 249,545      $ 892,152      $ 756,435   

Reimbursed out-of-pocket engagement expenses

    14,721        9,326        37,401        27,478   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    358,879        258,871        929,553        783,913   
 

 

 

   

 

 

   

 

 

   

 

 

 

Compensation and benefits

    242,429        164,802        610,493        508,564   

General and administrative expenses

    57,395        36,767        139,449        104,280   

Reimbursed expenses

    14,721        9,326        37,401        27,478   

Cost of services

    17,494        8,653        38,850        27,824   

Depreciation and amortization

    10,330        6,814        24,933        20,363   

Restructuring charges (recoveries), net

    30,577        (418     30,577        9,468   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    372,946        225,944        881,703        697,977   
 

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

    (14,067     32,927        47,850        85,936   

Other (loss) income, net

    (7,092     (1,478     (9,812     3,061   

Interest (expense) income, net

    (372     288        (1,215     (1,426
 

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries

    (21,531     31,737        36,823        87,571   

Equity in earnings of unconsolidated subsidiaries

    181        778        1,446        1,696   

Income tax (benefit) provision

    (5,355     9,576        13,211        26,392   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  $ (15,995   $ 22,939      $ 25,058      $ 62,875   
 

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per common share:

       

Basic

  $ (0.30   $ 0.46      $ 0.49      $ 1.27   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ (0.30   $ 0.46      $ 0.48      $ 1.25   
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average common shares outstanding:

       

Basic

    54,003        49,135        51,159        48,973   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

    54,003        49,724        51,683        49,663   
 

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share:

  $ 0.10      $ —        $ 0.30      $ —     
 

 

 

   

 

 

   

 

 

   

 

 

 


KORN FERRY AND SUBSIDIARIES

FINANCIAL SUMMARY BY SEGMENT

(in thousands)

(unaudited)

 

    Three Months Ended January 31,     Nine Months Ended January 31,  
    2016           2015     % Change     2016           2015     % Change  

Fee Revenue:

               

Executive recruitment:

               

North America

  $ 93,520        $ 78,026        20   $ 276,667        $ 243,055        14

EMEA

    35,498          36,816        (4 %)      108,158          113,788        (5 %) 

Asia Pacific

    19,094          20,924        (9 %)      59,307          61,615        (4 %) 

South America

    6,541          7,713        (15 %)      19,083          22,366        (15 %) 
 

 

 

     

 

 

     

 

 

     

 

 

   

Total executive recruitment

    154,653          143,479        8     463,215          440,824        5

Hay Group

    140,508          64,313        118     283,350          194,269        46

Futurestep

    48,997          41,753        17     145,587          121,342        20
 

 

 

     

 

 

     

 

 

     

 

 

   

Total fee revenue

    344,158          249,545        38     892,152          756,435        18

Reimbursed out-of-pocket engagement expenses

    14,721          9,326        58     37,401          27,478        36
 

 

 

     

 

 

     

 

 

     

 

 

   

Total revenue

  $ 358,879        $ 258,871        39   $ 929,553        $ 783,913        19
 

 

 

     

 

 

     

 

 

     

 

 

   
          Margin           Margin           Margin           Margin  

Operating (Loss) Income:

               

Executive recruitment:

               

North America

  $ 28,957        31.0   $ 22,673        29.1   $ 80,524        29.1   $ 60,788        25.0

EMEA

    1,707        4.8     5,073        13.8     14,912        13.8     13,337        11.7

Asia Pacific

    2,775        14.5     4,096        19.6     9,668        16.3     10,042        16.3

South America

    1,166        17.8     1,741        22.6     3,644        19.1     3,513        15.7
 

 

 

     

 

 

     

 

 

     

 

 

   

Total executive recruitment

    34,605        22.4     33,583        23.4     108,748        23.5     87,680        19.9

Hay Group

    (21,559     (15.3 %)      8,577        13.3     (6,286     (2.2 %)      19,799        10.2

Futurestep

    6,630        13.5     5,760        13.8     19,715        13.5     14,367        11.8

Corporate

    (33,743       (14,993       (74,327       (35,910  
 

 

 

     

 

 

     

 

 

     

 

 

   

Total operating (loss) income

  $ (14,067     (4.1 %)    $ 32,927        13.2   $ 47,850        5.4   $ 85,936        11.4
 

 

 

     

 

 

     

 

 

     

 

 

   


KORN FERRY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

 

     January 31,     April 30,  
     2016     2015  
     (unaudited)        

ASSETS

  

Cash and cash equivalents

   $ 207,342      $ 380,838   

Marketable securities

     9,118        25,757   

Receivables due from clients, net of allowance for doubtful accounts of $11,775 and $9,958 respectively

     330,687        188,543   

Income taxes and other receivables

     32,549        10,966   

Prepaid expenses and other assets

     43,157        31,054   
  

 

 

   

 

 

 

Total current assets

     622,853        637,158   
  

 

 

   

 

 

 

Marketable securities, non-current

     126,820        118,819   

Property and equipment, net

     90,150        62,088   

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

     104,837        102,691   

Deferred income taxes

     61,448        59,841   

Goodwill

     575,112        254,440   

Intangible assets, net

     238,889        47,901   

Investments and other assets

     53,191        34,863   
  

 

 

   

 

 

 

Total assets

   $ 1,873,300      $ 1,317,801   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

Accounts payable

   $ 25,656      $ 19,238   

Income taxes payable

     2,612        3,813   

Compensation and benefits payable

     213,599        219,364   

Term loan

     31,034        —     

Other accrued liabilities

     155,100        63,595   
  

 

 

   

 

 

 

Total current liabilities

     428,001        306,010   
  

 

 

   

 

 

 

Deferred compensation and other retirement plans

     203,378        173,432   

Term loan, non-current

     116,466        —     

Deferred tax liability

     57,985        —     

Other liabilities

     36,756        23,110   
  

 

 

   

 

 

 

Total liabilities

     842,586        502,552   
  

 

 

   

 

 

 

Stockholders’ equity

    

Common stock: $0.01 par value, 150,000 shares authorized, 69,951 and 62,863 shares issued and 57,270 and 50,573 shares outstanding, respectively

     697,397        463,839   

Retained earnings

     401,032        392,033   

Accumulated other comprehensive loss, net

     (67,715     (40,623
  

 

 

   

 

 

 

Total stockholders’ equity

     1,030,714        815,249   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 1,873,300      $ 1,317,801   
  

 

 

   

 

 

 


KORN FERRY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended     Three Months Ended  
     January 31, 2016     January 31, 2015  
     As Reported     Adjustments     As Adjusted     As Reported     Adjustments     As Adjusted  

Fee revenue

   $ 344,158      $ 5,871      $ 350,029      $ 249,545        $ 249,545   

Reimbursed out-of-pocket engagement expenses

     14,721          14,721        9,326          9,326   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     358,879        5,871        364,750        258,871        —          258,871   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Compensation and benefits

     242,429        (12,716     229,713        164,802          164,802   

General and administrative expenses

     57,395        (9,175     48,220        36,767        (445     36,322   

Reimbursed expenses

     14,721          14,721        9,326          9,326   

Cost of services

     17,494          17,494        8,653          8,653   

Depreciation and amortization

     10,330          10,330        6,814          6,814   

Restructuring charges (recoveries), net

     30,577        (30,577     —          (418     418        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     372,946        (52,468     320,478        225,944        (27     225,917   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (14,067     58,339        44,272        32,927        27        32,954   

Other loss, net

     (7,092       (7,092     (1,478       (1,478

Interest (expense) income, net

     (372       (372     288          288   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before (benefit) provision for income taxes and equity in earnings of unconsolidated subsidiaries

     (21,531     58,339        36,808        31,737        27        31,764   

Equity in earnings of unconsolidated subsidiaries

     181          181        778          778   

Income tax (benefit) provision (1) (2)

     (5,355     13,590        8,235        9,576        8        9,584   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (15,995   $ 44,749      $ 28,754      $ 22,939      $ 19      $ 22,958   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) earnings per common share:

            

Basic

   $ (0.30     $ 0.53      $ 0.46        $ 0.46   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

   $ (0.30     $ 0.52      $ 0.46        $ 0.46   
  

 

 

     

 

 

   

 

 

     

 

 

 

Weighted-average common shares outstanding:

            

Basic

     54,003          54,003        49,135          49,135   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

     54,003          54,433        49,724          49,724   
  

 

 

     

 

 

   

 

 

     

 

 

 

Explanation of Non-GAAP Adjustments

 

(1) The adjustments result in an effective tax rate of 22% and 30% for the as adjusted amounts for the three months ended January 31, 2016 and 2015, respectively.
(2) The three months ended January 31, 2016 includes the tax effect on restructuring charges, net, integration/acquisition costs and deferred revenue adjustment associated with the acquisition of Hay Group and separation costs, while the three months ended January 31, 2015 includes the tax effect on restructuring charges, net and acquisition costs.


KORN FERRY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

RECONCILIATION OF AS REPORTED (GAAP) TO AS ADJUSTED (NON-GAAP)

(in thousands, except per share amounts)

(unaudited)

 

    Nine Months Ended     Nine Months Ended  
    January 31, 2016     January 31, 2015  
    As Reported     Adjustments     As Adjusted     As Reported     Adjustments     As Adjusted  

Fee revenue

  $ 892,152      $ 5,871      $ 898,023      $ 756,435      $ —        $ 756,435   

Reimbursed out-of-pocket engagement expenses

    37,401          37,401        27,478          27,478   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    929,553        5,871        935,424        783,913        —          783,913   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Compensation and benefits

    610,493        (16,355     594,138        508,564          508,564   

General and administrative expenses

    139,449        (18,204     121,245        104,280        (445     103,835   

Reimbursed expenses

    37,401          37,401        27,478          27,478   

Cost of services

    38,850          38,850        27,824          27,824   

Depreciation and amortization

    24,933          24,933        20,363          20,363   

Restructuring charges, net

    30,577        (30,577     —          9,468        (9,468     —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    881,703        (65,136     816,567        697,977        (9,913     688,064   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    47,850        71,007        118,857        85,936        9,913        95,849   

Other (loss) income, net

    (9,812       (9,812     3,061          3,061   

Interest expense, net

    (1,215       (1,215     (1,426       (1,426
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes and equity in earnings of unconsolidated subsidiaries

    36,823        71,007        107,830        87,571        9,913        97,484   

Equity in earnings of unconsolidated subsidiaries

    1,446          1,446        1,696          1,696   

Income tax provision (1) (2)

    13,211        17,973        31,184        26,392        2,950        29,342   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 25,058      $ 53,034      $ 78,092      $ 62,875      $ 6,963      $ 69,838   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share:

           

Basic

  $ 0.49        $ 1.51      $ 1.27        $ 1.41   
 

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

  $ 0.48        $ 1.50      $ 1.25        $ 1.39   
 

 

 

     

 

 

   

 

 

     

 

 

 

Weighted-average common shares outstanding:

           

Basic

    51,159          51,159        48,973          48,973   
 

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

    51,683          51,683        49,663          49,663   
 

 

 

     

 

 

   

 

 

     

 

 

 

Explanation of Non-GAAP Adjustments

 

(1) The adjustments result in an effective tax rate of 29% and 30% for the as adjusted amounts for the nine months ended January 31, 2016 and 2015, respectively.
(2) The nine months ended January 31, 2016 includes the tax effect on restructuring charges, net, integration/acquisition costs and deferred revenue adjustment associated with the acquisition of Hay Group and separation costs, while the nine months ended January 31, 2015 includes the tax effect on restructuring charges, net and acquisition costs associated with the acquisition of PDI Ninth House.


KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF NET (LOSS) INCOME AND OPERATING (LOSS) INCOME (GAAP) TO

EBITDA AND ADJUSTED EBITDA (NON-GAAP)

(in thousands)

(unaudited)

 

    Three Months Ended January 31, 2016  
    Executive Recruitment                          
    North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Hay Group     Futurestep     Corporate     Consolidated  

Fee revenue

  $ 93,520      $ 35,498      $ 19,094      $ 6,541      $ 154,653      $ 140,508      $ 48,997      $ —        $ 344,158   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

                  $ (15,995

Other loss, net

                    7,092   

Interest expense, net

                    372   

Equity in earnings of unconsolidated subsidiaries, net

                    (181

Income tax benefit

                    (5,355
                 

 

 

 

Operating income (loss)

  $ 28,957      $ 1,707      $ 2,775      $ 1,166      $ 34,605      $ (21,559   $ 6,630      $ (33,743     (14,067

Depreciation and amortization

    812        213        235        73        1,333        6,722        609        1,666        10,330   

Other (loss) income, net

    (330     77        (114     9        (358     143        79        (6,956     (7,092

Equity in earnings of unconsolidated subsidiaries, net

    26        —          —          —          26        —          —          155        181   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    29,465        1,997        2,896        1,248        35,606        (14,694     7,318        (38,878     (10,648
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

    31.5     5.6     15.2     19.1     23.0     (10.5 %)      14.9       (3.1 %) 

Restructuring charges, net

    484        5,866        577        328        7,255        23,241        —          81        30,577   

Integration/acquisition costs

    —          —          —          —          —          8,413        —          12,734        21,147   

Deferred revenue adjustment due to acquisition

    —          —          —          —          —          5,871        —          —          5,871   

Separation costs

    —          —          —          —          —          —          —          744        744   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 29,949      $ 7,863      $ 3,473      $ 1,576      $ 42,861      $ 22,831      $ 7,318      $ (25,319   $ 47,691   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

    32.0     22.2     18.2     24.1     27.7     15.6     14.9       13.6
    Three Months Ended January 31, 2015  
    Executive Recruitment                          
    North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Hay Group     Futurestep     Corporate     Consolidated  

Fee revenue

  $ 78,026      $ 36,816      $ 20,924      $ 7,713      $ 143,479      $ 64,313      $ 41,753      $ —        $ 249,545   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

                  $ 22,939   

Other loss, net

                    1,478   

Interest income, net

                    (288

Equity in earnings of unconsolidated subsidiaries, net

                    (778

Income tax provision

                    9,576   
                 

 

 

 

Operating income (loss)

  $ 22,673      $ 5,073      $ 4,096      $ 1,741      $ 33,583      $ 8,577      $ 5,760      $ (14,993     32,927   

Depreciation and amortization

    867        431        216        79        1,593        3,317        469        1,435        6,814   

Other (loss) income, net

    (225     24        25        41        (135     (156     4        (1,191     (1,478

Equity in earnings of unconsolidated subsidiaries, net

    103        —          —          —          103        —          —          675        778   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    23,418        5,528        4,337        1,861        35,144        11,738        6,233        (14,074     39,041   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

    30.0     15.0     20.7     24.1     24.5     18.3     14.9       15.7

Restructuring recoveries, net

    —          —          —          (148     (148     —          (270     —          (418

Acquisition costs

    —          —          —          —          —          —          —          445        445   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 23,418      $ 5,528      $ 4,337      $ 1,713      $ 34,996      $ 11,738      $ 5,963      $ (13,629   $ 39,068   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

    30.0     15.0     20.7     22.2     24.4     18.3     14.3       15.7


KORN FERRY AND SUBSIDIARIES

RECONCILIATION OF NET INCOME AND OPERATING INCOME (GAAP) TO

EBITDA AND ADJUSTED EBITDA (NON-GAAP)

(in thousands)

(unaudited)

 

    Nine Months Ended January 31, 2016  
    Executive Recruitment                          
    North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Hay Group     Futurestep     Corporate     Consolidated  

Fee revenue

  $ 276,667      $ 108,158      $ 59,307      $ 19,083      $ 463,215      $ 283,350      $ 145,587      $ —        $ 892,152   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

                  $ 25,058   

Other loss, net

                    9,812   

Interest expense, net

                    1,215   

Equity in earnings of unconsolidated subsidiaries, net

                    (1,446

Income tax provision

                    13,211   
                 

 

 

 

Operating income (loss)

  $ 80,524      $ 14,912      $ 9,668      $ 3,644      $ 108,748      $ (6,286   $ 19,715      $ (74,327     47,850   

Depreciation and amortization

    2,471        810        704        224        4,209        14,058        1,772        4,894        24,933   

Other (loss) income, net

    (425     227        (102     281        (19     (737     87        (9,143     (9,812

Equity in earnings of unconsolidated subsidiaries, net

    252        —          —          —          252        —          —          1,194        1,446   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    82,822        15,949        10,270        4,149        113,190        7,035        21,574        (77,382     64,417   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

    29.9     14.7     17.3     21.7     24.4     2.5     14.8       7.2

Restructuring charges, net

    484        5,866        577        328        7,255        23,241        —          81        30,577   

Integration/acquisition costs

    —          —          —          —          —          12,052        —          21,763        33,815   

Deferred revenue adjustment due to acquisition

    —          —          —          —          —          5,871        —          —          5,871   

Separation costs

    —          —          —          —          —          —          —          744        744   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 83,306      $ 21,815      $ 10,847      $ 4,477      $ 120,445      $ 48,199      $ 21,574      $ (54,794   $ 135,424   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

    30.1     20.2     18.3     23.5     26.0     16.7     14.8       15.1
    Nine Months Ended January 31, 2015  
    Executive Recruitment                          
    North
America
    EMEA     Asia Pacific     South
America
    Subtotal     Hay Group     Futurestep     Corporate     Consolidated  

Fee revenue

  $ 243,055      $ 113,788      $ 61,615      $ 22,366      $ 440,824      $ 194,269      $ 121,342      $ —        $ 756,435   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

                  $ 62,875   

Other income, net

                    (3,061

Interest expense, net

                    1,426   

Equity in earnings of unconsolidated subsidiaries, net

                    (1,696

Income tax provision

                    26,392   
                 

 

 

 

Operating income (loss)

  $ 60,788      $ 13,337      $ 10,042      $ 3,513      $ 87,680      $ 19,799      $ 14,367      $ (35,910     85,936   

Depreciation and amortization

    2,662        1,366        771        249        5,048        9,848        1,374        4,093        20,363   

Other income (loss), net

    98        69        283        87        537        (111     27        2,608        3,061   

Equity in earnings of unconsolidated subsidiaries, net

    281        —          —          —          281        —          —          1,415        1,696   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    63,829        14,772        11,096        3,849        93,546        29,536        15,768        (27,794     111,056   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA margin

    26.3     13.0     18.0     17.2     21.2     15.2     13.0       14.7

Restructuring charges, net

    1,151        3,987        17        229        5,384        2,758        1,154        172        9,468   

Acquisition costs

    —          —          —          —          —          —          —          445        445   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 64,980      $ 18,759      $ 11,113      $ 4,078      $ 98,930      $ 32,294      $ 16,922      $ (27,177   $ 120,969   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA margin

    26.7     16.5     18.0     18.2     22.4     16.6     13.9       16.0