Korn Ferry Announces Fourth Quarter and Fiscal 2021 Results of Operations

Rhea-AI Summary

Korn Ferry (NYSE: KFY) reported record fourth quarter fee revenue of $555.2 million, up 26% year-over-year, and annual fee revenue of $1,810.0 million. Diluted earnings per share also reached an all-time high at $1.21. The company’s adjusted EBITDA margin was 20.3% for the fourth quarter. Despite a 6% annual revenue decline attributed to COVID-19 impacts, net income improved to $114.5 million. Q1 FY’22 projections indicate fee revenue between $535 million and $555 million, with diluted EPS expected between $1.04 and $1.14.

Positive

• Fourth quarter fee revenue increased by 26% year-over-year to $555.2 million.
• Diluted earnings per share reached an all-time high of $1.21.
• Adjusted EBITDA margin improved to 20.3%, indicating strong profitability.

Negative

• Annual fee revenue declined by 6% compared to FY'20, totaling $1,810.0 million.
• Operating income decreased to $155.8 million in FY'21, down from $176.0 million in FY'20.

Korn Ferry (NYSE: KFY), a global organizational consulting firm, today announced fourth quarter and annual fee revenue of $555.2 million and $1,810.0 million, respectively. In addition, fourth quarter diluted earnings per share and adjusted diluted earnings per share were $1.21; both are all-time highs.

“During the fiscal fourth quarter we generated $555 million in fee revenue, an all-time record, up 26% year-over-year. Our profitably was very strong, with earnings per share of $1.21, an all-time high and Adjusted EBITDA margin at 20.3%,” said Gary D. Burnison, CEO, Korn Ferry.

“I am extremely proud of our company and our accomplishments as we navigate through COVID-19. The diversity and relevance of our offerings and our ability to adapt to delivering our consulting services in a virtual world have helped companies achieve their organizational opportunities. Our Korn Ferry colleagues have truly shown their resilience, pivoting to the transformation and new ways of working that will emerge in a post-pandemic world, and I look forward to what the new fiscal year will bring to our firm and our clients.”

Selected Financial Results
(dollars in millions, except per share amounts) (a)
		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Fee revenue		$	555.2			$	440.5			$	1,810.0			$	1,932.7
Total revenue		$	557.4			$	449.0			$	1,819.9			$	1,977.3
Operating income		$	86.3			$	22.2			$	155.8			$	176.0
Operating margin			15.5	%			5.0	%			8.6	%			9.1	%
Net income (loss) attributable to Korn Ferry		$	66.2			$	(0.8	)		$	114.5			$	104.9
Basic earnings (loss) per share		$	1.22			$	(0.02	)		$	2.11			$	1.91
Diluted earnings (loss) per share		$	1.21			$	(0.02	)		$	2.09			$	1.90

Adjusted Results (b):		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Adjusted EBITDA		$	112.8			$	69.6			$	286.3			$	301.0
Adjusted EBITDA margin			20.3	%			15.8	%			15.8	%			15.6	%
Adjusted net income attributable to Korn Ferry		$	66.2			$	32.7			$	137.3			$	161.3
Adjusted basic earnings per share		$	1.22			$	0.60			$	2.53			$	2.94
Adjusted diluted earnings per share		$	1.21			$	0.60			$	2.51			$	2.91

___________
(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, net restructuring charges and separation costs 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’21			FY’20			FY’21			FY’20
Integration/acquisition costs		$	—		$	2.8		$	0.7		$	12.2
Restructuring charges, net		$	—		$	40.5		$	30.7		$	58.6
Separation costs		$	—		$	—		$	—		$	1.8
Debt refinancing costs		$	—		$	—		$	—		$	0.8

Fiscal 2021 Fourth Quarter Results

The Company reported fee revenue in Q4 FY’21 of $555.2 million, an increase of 26% (up 22% on a constant currency basis) compared to Q4 FY’20. Fee revenue increased in all lines of business. The increase in fee revenue when compared to Q4 FY’20 was primarily due to the Company’s recovery from the coronavirus pandemic (“COVID-19”) which began to impact the Company on a worldwide basis in Q4 FY’20, as well as the increasing relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues in today’s business environment.

Operating margin was 15.5% in Q4 FY’21 compared to 5.0% in the year-ago quarter. Adjusted EBITDA margin was 20.3%, compared to Adjusted EBITDA margin of 15.8% in the year-ago quarter. Net income attributable to Korn Ferry was $66.2 million in Q4 FY’21 compared to net loss attributable to Korn Ferry of $0.8 million in Q4 FY’20.

The year-over-year improvement in each of the above measures of profitability was due to the increase in fee revenue discussed above and cost saving actions the Company took in response to the impact of COVID-19 in both Q4 FY’20 and Q1 FY’21, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY’21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

Fiscal 2021 Results

The Company reported fee revenue in FY’21 of $1,810.0 million, a decrease of 6% (down 7% on a constant currency basis) compared to FY’20.

Operating income was $155.8 million in FY’21 with an operating margin of 8.6% compared to $176.0 million and 9.1% in FY’20. The decrease in operating income was primarily due to a decline in fee revenue, associated with the impact of COVID-19, partially offset by decreases in net restructuring charges, integration/acquisition costs and general administrative expenses, the latter of which resulted from the cost saving initiatives that were put in place.

Net income attributable to Korn Ferry was $114.5 million in FY’21 as compared to $104.9 million in FY’20.

Adjusted EBITDA was $286.3 million in FY’21 with Adjusted EBITDA margin of 15.8%, compared to $301.0 million and 15.6%, respectively, in the year-ago period.

Results by Line of Business

Selected Consulting Data
(dollars in millions) (a)
		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Fee revenue		$	153.6		$	121.0		$	515.8		$	543.1
Total revenue		$	153.8		$	123.4		$	517.0		$	557.3
Ending number of consultants and execution staff (b)			1,565			1,671			1,565			1,671
Hours worked in thousands (c)			428			415			1,565			1,758
Average billed rate (d)		$	359		$	292		$	330		$	309

Adjusted Results (e):		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Adjusted EBITDA		$	27.2			$	11.1			$	81.5			$	61.1
Adjusted EBITDA margin			17.7	%			9.2	%			15.8	%			11.2	%

___________
(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’21			FY’20			FY’21			FY’20
Restructuring charges, net		$	—		$	13.4		$	14.2		$	24.5

Fee revenue was $153.6 million in Q4 FY’21 compared to $121.0 million in Q4 FY’20, an increase of $32.6 million or 27% (up 23% on a constant currency basis). The increase in fee revenue was due to the Company recovering from COVID-19, which began to negatively impact the Company on a worldwide basis in Q4 FY’20. The diversity and increasing relevance of our consulting services and our ability to adapt to delivering the services in a virtual world has led to an increase in fee revenue in Q4 FY’21 compared to the year-ago quarter.

Adjusted EBITDA was $27.2 million in Q4 FY’21 with an Adjusted EBITDA margin of 17.7% compared to Adjusted EBITDA of $11.1 million with an associated margin of 9.2%, respectively, in the year-ago quarter. This change resulted from an increase in fee revenue and a decline in general and administrative expenses, which resulted from the cost saving initiatives that were put in place. These changes were offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY’21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

Selected Digital Data

(dollars in millions) (a)

Digital leverages an artificial intelligence powered, machine-learning platform to identify the best structures, roles, capabilities, and behaviors needed to drive business forward. This end-to-end platform combines Korn Ferry proprietary data, client data, and external market data to help make better, faster decisions about organizations, leadership, and people.

		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Fee revenue		$	80.5		$	69.3		$	287.3		$	292.4
Total revenue		$	80.8		$	69.9		$	287.8		$	294.3
Ending number of consultants			295			421			295			421
Subscription & License fee revenue		$	23.6		$	20.9		$	89.9		$	73.5

Adjusted Results (b):		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Adjusted EBITDA		$	27.9			$	17.0			$	86.1			$	83.1
Adjusted EBITDA margin			34.7	%			24.5	%			30.0	%			28.4	%

___________
(a)		Numbers may not total due to rounding.
(b)		Adjusted results exclude the following:

		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Integration/acquisition costs		$	—		$	1.6		$	0.6		$	5.9
Restructuring charges, net		$	—		$	3.4		$	2.9		$	10.5

Fee revenue was $80.5 million in Q4 FY’21 compared to $69.3 million in Q4 FY’20, an increase of $11.2 million or 16% (up 12% on a constant currency basis). The increase in fee revenue was due to the Company recovering from COVID-19, which began to negatively impact the Company on a worldwide basis in Q4 FY’20. As economies around the world recover and companies pivot from in person training to virtual delivery of training courses, the demand for our products and services has now exceeded pre-pandemic levels.

Adjusted EBITDA was $27.9 million in Q4 FY’21 with an Adjusted EBITDA margin of 34.7% compared to $17.0 million and 24.5%, respectively, in the year-ago quarter. Contributing to the increase were higher fee revenues and decreases in general and administrative expenses, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY’21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

Selected Executive Search Data(a)
(dollars in millions) (b)
		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Fee revenue		$	200.7		$	167.9		$	637.0		$	732.5
Total revenue		$	201.3		$	171.2		$	639.3		$	749.2
Ending number of consultants			524			556			524			556
Average number of consultants			523			569			540			560
Engagements billed			3,794			3,424			8,672			9,722
New engagements (c)			1,712			1,229			5,459			6,064

Adjusted Results (d):		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Adjusted EBITDA		$	49.8			$	47.5			$	127.8			$	181.1
Adjusted EBITDA margin			24.8	%			28.3	%			20.1	%			24.7	%

________
(a)		Executive Search is the sum of the individual Executive Search Reporting Segments and is presented on a consolidated basis as it is consistent with the Company’s discussion of its Lines of Business, and financial metrics used by the Company’s investor base.
(b)		Numbers may not total due to rounding.
(c)		Represents new engagements opened in the respective period.
(d)		Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures that adjust for the following:

		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Restructuring charges, net		$	—		$	17.5		$	10.4		$	17.5
Separation costs		$	—		$	—		$	—		$	1.8

Fee revenue was $200.7 million and $167.9 million in Q4 FY’21 and Q4 FY’20, respectively, a year-over-year increase of $32.8 million or 20% (up 16% on a constant currency basis). The increase in fee revenue was primarily attributable to higher fee revenue in North America where demand for our products and services has now exceeded pre-pandemic levels in conjunction with the worldwide economic recovery.

Adjusted EBITDA was $49.8 million in Q4 FY’21 with an Adjusted EBITDA margin of 24.8% compared to Adjusted EBITDA of $47.5 million and Adjusted EBITDA margin of 28.3%, respectively, in the year-ago quarter. While Adjusted EBITDA was up slightly, Adjusted EBITDA margin was down 350bps due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY’21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

Selected RPO and Professional Search Data
(dollars in millions) (a)
		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Fee revenue		$	120.4		$	82.4		$	369.9		$	364.8
Total revenue		$	121.5		$	84.5		$	375.8		$	376.6
Engagements billed (b)			1,626			1,206			3,558			3,641
New engagements (c)			883			573			2,971			2,744

Adjusted Results (d):		Fourth Quarter								Year to Date
		FY’21				FY’20				FY’21				FY’20
Adjusted EBITDA		$	30.0			$	12.7			$	69.4			$	60.2
Adjusted EBITDA margin			24.9	%			15.4	%			18.8	%			16.5	%

___________
(a)		Numbers may not total due to rounding.
(b)		Represents professional search engagements billed.
(c)		Represents new professional search engagements opened in the respective period.
(d)		Adjusted results exclude the following:

		Fourth Quarter						Year to Date
		FY’21			FY’20			FY’21			FY’20
Restructuring charges, net		$	—		$	5.7		$	3.2		$	5.7

Fee revenue was $120.4 million in Q4 FY’21, an increase of $38.0 million or 46% (up 40% on a constant currency basis), compared to the year-ago quarter. The higher fee revenue was driven by an increase in recruitment process outsourcing (“RPO”) fee revenue of $28.9 million or 58% (51% at constant currency) and an increase in Professional Search of $9.1 million or 28% (23% at constant currency) due to the Company recovering from COVID-19, which began to negatively impact the Company on a worldwide basis in Q4 FY’20.

Adjusted EBITDA was $30.0 million in Q4 FY’21 with an Adjusted EBITDA margin of 24.9% in Q4 FY’21 compared to $12.7 million and 15.4%, respectively, in the year-ago quarter. The increase in Adjusted EBITDA was due to the higher fee revenue discussed above, partially offset by an increase in compensation and benefits expense due to the Company recording an accrual to fully reimburse colleagues for pay cuts taken in FY’21 that were not previously reimbursed and an increase in performance related bonus expense due to the revenue growth through the recovery combined with an increase in overall profitability.

Outlook

Assuming no new major pandemic lockdowns, worldwide economic conditions, financial markets and foreign exchange rates remain steady, on a consolidated basis:

• Q1 FY’22 fee revenue is expected to be in the range of $535 million and $555 million; and
• Q1 FY’22 diluted earnings per share is expected to range between $1.04 to $1.14.

Earnings Conference Call Webcast

The earnings conference call will be held today at 12:00 PM (EDT) and hosted by CEO Gary Burnison, CFO Robert Rozek and SVP Finance Gregg Kvochak. The conference call will be webcast and available online at ir.kornferry.com. We will also post to this section of our website earnings slides, which will accompany our webcast, and other important information, and encourage you to review the information that we make available on our website.

About Korn Ferry

Korn Ferry is a global organizational consulting firm. We help clients synchronize strategy and talent to drive superior performance. We work with organizations to design their structures, roles, and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop, and motivate their people. Visit kornferry.com for more information.

Forward-Looking Statements

Statements in this press release and our conference call that relate to our outlook, projections, goals, strategies, future plans and expectations, 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. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to expected demand for our products and services, the timing and expected benefits of our restructuring plan, the magnitude and duration of the impact of the COVID-19 outbreak on our business, employees, customers and our ability to provide services in affected regions, and the potential opportunities for our business as a result of worldwide changes in how companies conduct business as a result of COVID-19. Readers are cautioned not to place undue reliance on such statements. Such statements are based on current expectations; actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties that are beyond the control of Korn Ferry. The potential risks and uncertainties include those relating to the ultimate magnitude and duration of COVID-19 and any future pandemic or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, the dependence on and costs of attracting and retaining qualified and experienced consultants, our ability to maintain relationships with customers and suppliers and retain key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, the portability of client relationships, consolidation of the industries we serve, changes and developments in government laws and regulations, evolving investor and customer expectations with regard to environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities, changes to data security, data privacy and data protection laws, limited protection of our intellectual property, our ability to enhance and develop new technology, our ability to develop new products and services, the utilization and billing rates of our consultants, dependence on third parties for the execution of critical functions, our ability to successfully recover from a disaster or other business continuity problems, changes in our accounting estimates/assumptions, technical guidance relating to the Tax Act, treaties, or regulations on our business and our company, impairment of goodwill and other intangible assets, deferred tax assets that we may not be able to use, our indebtedness, the phase-out of the London Interbank Offered Rate, the withdrawal of the United Kingdom from the European Union, expansion of social media platforms, seasonality, ability to effect acquisition and integrate acquired businesses and employment liability risk. For a detailed description of risks and uncertainties that could cause differences, please refer to Korn Ferry’s periodic filings with the Securities and Exchange Commission. Korn Ferry disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). In particular, it includes:

• Adjusted net income attributable to Korn Ferry, adjusted to exclude integration/acquisition costs, restructuring charges, separation costs and debt refinancing costs net of income tax effect;
• Adjusted basic and diluted earnings per share, adjusted to exclude integration/acquisition costs, restructuring charges, separation costs and debt refinancing costs net of income tax effect;
• Constant currency (calculated using a quarterly average) percentages that represent the percentage change that would have resulted had exchange rates in the prior period been the same as those in effect in the current period;
• Consolidated and Executive Search Adjusted EBITDA, which is earnings before interest, taxes, depreciation and amortization, further adjusted to exclude integration/acquisition costs, restructuring charges and separations costs, 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 Digital business, 2) charges we incurred to restructure the Company as a result of COVID-19 and due to the acquisition of the acquired companies, 3) separation costs and 4) debt refinancing costs. 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.

[Tables attached]

KORN FERRY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
		Three Months Ended								Year Ended
		April 30,								April 30,
		2021				2020				2021				2020
		(unaudited)
Fee revenue		$	555,151			$	440,469			$	1,810,047			$	1,932,732
Reimbursed out-of-pocket engagement expenses			2,243				8,507				9,899				44,598
Total revenue			557,394				448,976				1,819,946				1,977,330
Compensation and benefits			380,350				283,519				1,297,880				1,297,994
General and administrative expenses			50,940				59,786				191,776				258,957
Reimbursed expenses			2,243				8,507				9,899				44,598
Cost of services			21,832				19,515				72,030				85,886
Depreciation and amortization			15,777				14,956				61,845				55,311
Restructuring charges, net			-				40,466				30,732				58,559
Total operating expenses			471,142				426,749				1,664,162				1,801,305
Operating income			86,252				22,227				155,784				176,025
Other income (loss), net			10,820				(10,893	)			37,194				(2,879	)
Interest expense, net			(7,592	)			(6,998	)			(29,278	)			(22,184	)
Income before provision for income taxes			89,480				4,336				163,700				150,962
Income tax provision			22,729				4,957				48,138				43,945
Net income (loss)			66,751				(621	)			115,562				107,017
Net income attributable to noncontrolling interest			(561	)			(181	)			(1,108	)			(2,071	)
Net income (loss) attributable to Korn Ferry		$	66,190			$	(802	)		$	114,454			$	104,946
Earnings (loss) per common share attributable to Korn Ferry:
Basic		$	1.22			$	(0.02	)		$	2.11			$	1.91
Diluted		$	1.21			$	(0.02	)		$	2.09			$	1.90
Weighted-average common shares outstanding:
Basic			52,621				53,534				52,928				54,342
Diluted			53,243				53,534				53,405				54,767
Cash dividends declared per share:		$	0.10			$	0.10			$	0.40			$	0.40

KORN FERRY AND SUBSIDIARIES
FINANCIAL SUMMARY BY REPORTING SEGMENT
(dollars in thousands)
(unaudited)
		Three Months Ended April 30,									Year Ended April '30,
		2021			2020			% Change			2021			2020			% Change
Fee revenue:
Consulting		$	153,573		$	120,992		26.9	%		$	515,844		$	543,095		(5.0	%)
Digital			80,499			69,269		16.2	%			287,306			292,366		(1.7	%)
Executive Search:
North America			130,790			102,196		28.0	%			397,275			434,624		(8.6	%)
EMEA			41,253			39,662		4.0	%			138,954			170,314		(18.4	%)
Asia Pacific			23,604			19,737		19.6	%			83,306			98,132		(15.1	%)
Latin America			5,081			6,260		(18.8	%)			17,500			29,400		(40.5	%)
Total Executive Search (a)			200,728			167,855		19.6	%			637,035			732,470		(13.0	%)
RPO and Professional Search			120,351			82,353		46.1	%			369,862			364,801		1.4	%
Total fee revenue			555,151			440,469		26.0	%			1,810,047			1,932,732		(6.3	%)
Reimbursed out-of-pocket engagement expenses			2,243			8,507		(73.6	%)			9,899			44,598		(77.8	%)
Total revenue		$	557,394		$	448,976		24.1	%		$	1,819,946		$	1,977,330		(8.0	%)

(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,
		2021				2020
ASSETS
Cash and cash equivalents		$	850,778			$	689,244
Marketable securities			63,667				41,951
Receivables due from clients, net of allowance for doubtful accounts of $29,324 and $23,795 at April 30, 2021 and 2020, respectively			448,733				397,165
Income taxes and other receivables			40,024				38,755
Unearned compensation			53,206				43,117
Prepaid expenses and other assets			30,724				26,851
Total current assets			1,487,132				1,237,083
Marketable securities, non-current			182,692				132,134
Property and equipment, net			131,778				142,728
Operating lease right-of-use assets, net			174,121				195,077
Cash surrender value of company-owned life insurance policies, net of loans			161,295				146,408
Deferred income taxes			73,106				55,479
Goodwill			626,669				613,943
Intangible assets, net			92,949				111,926
Unearned compensation, non-current			102,356				79,510
Investments and other assets			24,428				29,540
Total assets		$	3,056,526			$	2,743,828
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable		$	44,993			$	45,684
Income taxes payable			23,041				21,158
Compensation and benefits payable			394,606				280,911
Operating lease liability, current			47,986				54,851
Other accrued liabilities			239,444				221,603
Total current liabilities			750,070				624,207
Deferred compensation and other retirement plans			346,455				289,136
Operating lease liability, non-current			155,998				180,766
Long-term debt			394,794				394,144
Deferred tax liabilities			3,832				1,056
Other liabilities			36,602				30,828
Total liabilities			1,687,751				1,520,137
Stockholders' equity
Common stock: $0.01 par value, 150,000 shares authorized, 74,915 and 73,205 shares issued and 54,008 and 54,450 shares outstanding at April 30, 2021 and 2020, respectively			583,260				585,560
Retained earnings			834,949				742,993
Accumulated other comprehensive loss, net			(51,820	)			(107,172	)
Total Korn Ferry stockholders' equity			1,366,389				1,221,381
Noncontrolling interest			2,386				2,310
Total stockholders' equity			1,368,775				1,223,691
Total liabilities and stockholders' equity		$	3,056,526			$	2,743,828

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(dollars in thousands, except per share amounts)
(unaudited)
		Three Months Ended								Year Ended
		April 30,								April 30,
		2021				2020				2021				2020
Net income (loss) attributable to Korn Ferry		$	66,190			$	(802	)		$	114,454			$	104,946
Net income attributable to non-controlling interest			561				181				1,108				2,071
Net income (loss)			66,751				(621	)			115,562				107,017
Income tax provision			22,729				4,957				48,138				43,945
Income before provision for income taxes			89,480				4,336				163,700				150,962
Other (income) loss, net			(10,820	)			10,893				(37,194	)			2,879
Interest expense, net			7,592				6,998				29,278				22,184
Operating income			86,252				22,227				155,784				176,025
Depreciation and amortization			15,777				14,956				61,845				55,311
Other income (loss), net			10,820				(10,893	)			37,194				(2,879	)
Integration/acquisition costs (1)			-				2,833				737				12,152
Restructuring charges, net (2)			-				40,466				30,732				58,559
Separation costs (3)			-				-				-				1,783
Adjusted EBITDA		$	112,849			$	69,589			$	286,292			$	300,951
Operating margin			15.5	%			5.0	%			8.6	%			9.1	%
Depreciation and amortization			2.8	%			3.4	%			3.4	%			2.8	%
Other income (loss), net			2.0	%			(2.4	%)			2.1	%			(0.1	%)
Integration/acquisition costs (1)			-				0.6	%			-				0.7	%
Restructuring charges, net (2)			-				9.2	%			1.7	%			3.0	%
Separation costs (3)			-				-				-				0.1	%
Adjusted EBITDA margin			20.3	%			15.8	%			15.8	%			15.6	%
Net income (loss) attributable to Korn Ferry		$	66,190			$	(802	)		$	114,454			$	104,946
Integration/acquisition costs (1)			-				2,833				737				12,152
Restructuring charges, net (2)			-				40,466				30,732				58,559
Separation costs (3)			-				-				-				1,783
Debt refinancing costs (4)			-				-				-				828
Tax effect on the adjusted items (5)			-				(9,819	)			(8,597	)			(16,938	)
Adjusted net income attributable to Korn Ferry		$	66,190			$	32,678			$	137,326			$	161,330
Basic earnings (loss) per common share		$	1.22			$	(0.02	)		$	2.11			$	1.91
Integration/acquisition costs (1)			-				0.05				0.01				0.22
Restructuring charges, net (2)			-				0.75				0.58				1.07
Separation costs (3)			-				-				-				0.03
Debt refinancing costs (4)			-				-				-				0.02
Tax effect on the adjusted items (5)			-				(0.18	)			(0.17	)			(0.31	)
Adjusted basic earnings per share		$	1.22			$	0.60			$	2.53			$	2.94
Diluted earnings (loss) per common share		$	1.21			$	(0.02	)		$	2.09			$	1.90
Integration/acquisition costs (1)			-				0.05				0.01				0.22
Restructuring charges, net (2)			-				0.75				0.57				1.06
Separation costs (3)			-				-				-				0.03
Debt refinancing costs (4)			-				-				-				0.01
Tax effect on the adjusted items (5)			-				(0.18	)			(0.16	)			(0.31	)
Adjusted diluted earnings per share		$	1.21			$	0.60			$	2.51			$	2.91

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)		Restructuring charges we incurred to rationalize our cost structure by eliminating redundant positions because of COVID-19 and due to the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution on November 1, 2019.
(3)		Costs associated with certain senior management separation charges.
(4)		Costs to write-off debt issuance costs and interest rate swap as a result of replacing our prior Credit Agreement with a new senior secured Credit Agreement.
(5)		Tax effect on integration/acquisition costs, restructuring charges, net, separation costs and write-offs of debt issuance costs.

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) AND
OPERATING INCOME (GAAP) TO ADJUSTED EBITDA (NON-GAAP)
(in thousands)
(unaudited)
		Three Months Ended April 30, 2021
										Executive Search
		Consulting				Digital				North America				EMEA				Asia Pacific				Latin America				Subtotal				RPO and Professional Search				Corporate				Consolidated
Fee revenue		$	153,573			$	80,499			$	130,790			$	41,253			$	23,604			$	5,081			$	200,728			$	120,351			$	-			$	555,151
Total revenue		$	153,812			$	80,753			$	131,314			$	41,288			$	23,623			$	5,081			$	201,306			$	121,523			$	-			$	557,394
Net income attributable to Korn Ferry																																						$	66,190
Net income attributable to noncontrolling interest																																							561
Other income, net																																							(10,820	)
Interest expense, net																																							7,592
Income tax provision																																							22,729
Operating income																																							86,252
Depreciation and amortization																																							15,777
Other income, net																																							10,820
Adjusted EBITDA		$	27,240			$	27,934			$	40,660			$	3,297			$	5,066			$	809			$	49,832			$	29,958			$	(22,115	)		$	112,849
Adjusted EBITDA margin			17.7	%			34.7	%			31.1	%			8.0	%			21.5	%			15.9	%			24.8	%			24.9	%							20.3	%
		Three Months Ended April 30, 2020
										Executive Search
		Consulting				Digital				North America				EMEA				Asia Pacific				Latin America				Subtotal				RPO and Professional Search				Corporate				Consolidated
Fee revenue		$	120,992			$	69,269			$	102,196			$	39,662			$	19,737			$	6,260			$	167,855			$	82,353			$	-			$	440,469
Total revenue		$	123,423			$	69,890			$	104,775			$	40,148			$	20,008			$	6,282			$	171,213			$	84,450			$	-			$	448,976
Net loss attributable to Korn Ferry																																						$	(802	)
Net income attributable to noncontrolling interest																																							181
Other loss, net																																							10,893
Interest expense, net																																							6,998
Income tax provision																																							4,957
Operating income																																							22,227
Depreciation and amortization																																							14,956
Other loss, net																																							(10,893	)
Integration/acquisition costs																																							2,833
Restructuring, charges, net																																							40,466
Adjusted EBITDA		$	11,102			$	16,989			$	32,114			$	9,342			$	3,822			$	2,216			$	47,494			$	12,712			$	(18,708	)		$	69,589
Adjusted EBITDA margin			9.2	%			24.5	%			31.4	%			23.6	%			19.4	%			35.4	%			28.3	%			15.4	%							15.8	%

KORN FERRY AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED NET INCOME AND
OPERATING INCOME (GAAP) TO ADJUSTED EBITDA (NON-GAAP)
(in thousands)
(unaudited)
		Year Ended April 30, 2021
										Executive Search
		Consulting				Digital				North America				EMEA				Asia Pacific				Latin America				Subtotal				RPO and Professional Search				Corporate				Consolidated
Fee revenue		$	515,844			$	287,306			$	397,275			$	138,954			$	83,306			$	17,500			$	637,035			$	369,862			$	-			$	1,810,047
Total revenue		$	517,046			$	287,780			$	399,104			$	139,213			$	83,463			$	17,500			$	639,280			$	375,840			$	-			$	1,819,946
Net income attributable to Korn Ferry																																						$	114,454
Net income attributable to noncontrolling interest																																							1,108
Other income, net																																							(37,194	)
Interest expense, net																																							29,278
Income tax provision																																							48,138
Operating income																																							155,784
Depreciation and amortization																																							61,845
Other income, net																																							37,194
Integration/acquisition costs																																							737
Restructuring charges, net																																							30,732
Adjusted EBITDA		$	81,522			$	86,095			$	98,099			$	11,742			$	16,676			$	1,289			$	127,806			$	69,411			$	(78,542	)		$	286,292
Adjusted EBITDA margin			15.8	%			30.0	%			24.7	%			8.5	%			20.0	%			7.4	%			20.1	%			18.8	%							15.8	%
		Year Ended April 30, 2020
										Executive Search
		Consulting				Digital				North America				EMEA				Asia Pacific				Latin America				Subtotal				RPO and Professional Search				Corporate				Consolidated
Fee revenue		$	543,095			$	292,366			$	434,624			$	170,314			$	98,132			$	29,400			$	732,470			$	364,801			$	-			$	1,932,732
Total revenue		$	557,255			$	294,261			$	447,528			$	172,978			$	99,209			$	29,493			$	749,208			$	376,606			$	-			$	1,977,330
Net income attributable to Korn Ferry																																						$	104,946
Net income attributable to noncontrolling interest																																							2,071
Other loss, net																																							2,879
Interest expense, net																																							22,184
Income tax provision																																							43,945
Operating income																																							176,025
Depreciation and amortization																																							55,311
Other loss, net																																							(2,879	)
Integration/acquisition costs																																							12,152
Restructuring charges, net																																							58,559
Separation costs																																							1,783
Adjusted EBITDA		$	61,092			$	83,073			$	120,725			$	31,067			$	22,885			$	6,402			$	181,079			$	60,168			$	(84,461	)		$	300,951
Adjusted EBITDA margin			11.2	%			28.4	%			27.8	%			18.2	%			23.3	%			21.8	%			24.7	%			16.5	%							15.6	%

 

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FAQ

What were Korn Ferry's earnings results for Q4 FY’21 and FY’21?

Korn Ferry reported Q4 FY’21 fee revenue of $555.2 million and annual fee revenue of $1,810.0 million.

What is Korn Ferry's diluted earnings per share for Q4 FY’21?

The diluted earnings per share for Q4 FY’21 was $1.21, an all-time high.

What is Korn Ferry's guidance for Q1 FY’22 revenue and earnings per share?

Korn Ferry expects Q1 FY’22 fee revenue between $535 million and $555 million, with diluted EPS between $1.04 and $1.14.