Korn Ferry(US:KFY)2020-07-15 17:23Company Overview - Korn Ferry operates in 111 offices across 53 countries, with 8,198 full-time employees, including 2,979 consultants[12]. - The organization operates through four global segments: Consulting, Digital, Executive Search, and RPO & Professional Search, ensuring a diversified service offering[52]. - The company had a total of 8,198 full-time employees as of April 30, 2020, with 1,686 in Executive Search and 2,891 in RPO & Professional Search[88]. Client Engagement and Revenue - In fiscal 2020, Korn Ferry partnered with 13,724 client organizations, achieving a client loyalty rate of 90% for engagements completed for repeat clients[13]. - Approximately 71% of Korn Ferry's revenue comes from clients utilizing multiple lines of business, indicating strong cross-segment integration[16]. - Consulting fee revenue was $543.1 million in fiscal 2020, representing 28% of the Company's total fee revenue[61]. - Digital fee revenue increased to $292.4 million in fiscal 2020, up from $252.7 million in fiscal 2019, marking a growth of approximately 15%[67]. - During fiscal 2020, the Consulting segment partnered with approximately 4,800 clients globally, with 22% of fee revenue referred from other segments[62]. - Korn Ferry's RPO & Professional Search segment partnered with 2,202 clients globally, with 43% of its fiscal 2020 fee revenue referred from the Executive Search Consulting and Digital segments[85]. Strategic Initiatives - The company has evolved into a multi-faceted consultancy, expanding into larger addressable markets for higher growth potential and more durable revenue streams[25]. - Korn Ferry's go-to-market strategy aims to integrate core solutions, with 71% of revenues derived from clients using multiple services[40]. - The Korn Ferry Institute focuses on crisis management and organizational transformation, driving business and societal impact through research and analytics[35]. - Korn Ferry's digital transformation services help clients implement agile operating models and attract digital talent through proprietary data insights[30]. - Korn Ferry's talent strategy emphasizes the importance of upskilling and developing existing workforces to address the anticipated global talent shortage[1]. Financial Performance and Challenges - The company reported a restructuring charge of $40.5 million in fiscal 2020 due to a reduction in workforce as part of its cost-saving measures[95]. - The company's profitability is significantly affected by the utilization and billing rates of its consultants, which are influenced by various market factors[120]. - The company may experience difficulties in aligning its cost structure with revenue levels, impacting financial results if utilization and billing rates are not maintained[97]. - The company faces significant competition in the human resource consulting market, with large firms like Ernst & Young and McKinsey posing challenges to market share and pricing[99]. - The company is subject to potential legal liabilities from various stakeholders, including clients and candidates, which may not be fully covered by insurance[114]. Debt and Financial Obligations - The company had approximately $400.0 million in total indebtedness outstanding as of April 30, 2020[129]. - The company's ability to service its indebtedness depends on its financial and operating performance, which is influenced by external economic factors[135]. - The company may need to restructure or refinance its debt if it is unable to meet its debt service obligations, which could impair its liquidity[136]. - The company is subject to financial covenants in its Credit Agreement, which may limit its ability to raise additional debt or equity financing[141]. Acquisitions and Growth Strategy - The company has made strategic acquisitions, including the acquisition of Hay Group in fiscal 2016, as part of its growth strategy[160]. - Future acquisitions may be conditioned on maintaining pro forma compliance with financial covenants and having domestic liquidity of at least $50 million[161]. - The company faces risks related to the integration of acquired businesses, which could adversely affect its financial condition and reputation[163]. Market and Regulatory Risks - The company faces risks associated with social and political instability in international operations, which could affect overall performance[97]. - Changes in foreign currency exchange rates could adversely affect the company's financial results, as a material portion of revenue and expenses are generated internationally[124]. - Compliance with data protection laws like GDPR may increase operational costs and limit service offerings, with potential fines up to 4% of annual worldwide revenue for non-compliance[156]. - The evolving regulatory landscape regarding data security may impose additional burdens and increase potential exposure to penalties for non-compliance[159]. Stockholder and Capital Management - The company has a stock repurchase program with an aggregate capacity of $250 million, allowing for repurchases in open market transactions or privately negotiated transactions[208]. - The Board of Directors adopted a quarterly cash dividend policy of $0.10 per share on December 8, 2014[204]. - The cumulative total stockholder return for the company is measured against the S&P 500 Index and a peer group, assuming an initial investment of $100 on April 30, 2015[198].