Korn Ferry(US:KFY)2022-03-10 16:00Part I. Financial Information Consolidated Financial Statements This section presents the unaudited consolidated financial statements for the quarter ended January 31, 2022, highlighting significant year-over-year growth in revenue and net income Key Financial Highlights (Q3 FY2022 vs Q3 FY2021) | Financial Metric | Three Months Ended Jan 31, 2022 | Three Months Ended Jan 31, 2021 | | :--- | :--- | :--- | | Total Revenue | $685.0 million | $477.9 million | | Operating Income | $126.3 million | $65.2 million | | Net Income Attributable to Korn Ferry | $84.1 million | $51.3 million | | Diluted EPS | $1.54 | $0.94 | Key Balance Sheet Data | Balance Sheet Item | Jan 31, 2022 (unaudited) | April 30, 2021 | | :--- | :--- | :--- | | Total Assets | $3,336.1 million | $3,056.5 million | | Total Liabilities | $1,800.9 million | $1,687.8 million | | Total Stockholders' Equity | $1,535.2 million | $1,368.8 million | | Cash and cash equivalents | $846.5 million | $850.8 million | Notes to Consolidated Unaudited Financial Statements This section details the company's accounting policies and financial data, covering business lines, revenue recognition, the Lucas Group acquisition, segment performance, debt, and employee stock plans - The company operates through four main lines of business: Consulting, Digital, Executive Search, and RPO & Professional Search Executive Search is managed geographically, representing four of the seven reportable segments23102 - On November 1, 2021, the Company acquired Lucas Group for $90.9 million, net of cash acquired This acquisition is expected to enhance the RPO & Professional Search segment by adding professional search and contracting expertise124125 - As of January 31, 2022, the company had $400 million in 4.625% Senior Unsecured Notes due 2027 and a $650 million revolving credit facility with no outstanding balance110113116 - On March 8, 2022, the Board of Directors declared a quarterly cash dividend of $0.12 per share127 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's strong financial performance for Q3 and the first nine months of fiscal 2022, highlighting a 43% increase in fee revenue and covering segment results, liquidity, and capital resources Results of Operations The company experienced significant growth across all business lines, with fee revenue increasing 43% to $680.7 million for the quarter and 52% to $1.91 billion for the nine months, driven by increased demand and improved profitability Fee Revenue Growth by Segment (Q3 FY2022 vs Q3 FY2021) | Segment | Q3 FY22 Fee Revenue | YoY Growth | | :--- | :--- | :--- | | Consulting | $162.9M | 20% | | Digital | $90.2M | 19% | | Executive Search | $239.0M | 42% | | RPO & Professional Search | $188.7M | 98% | | Total | $680.7M | 43% | Adjusted EBITDA by Segment (Q3 FY2022 vs Q3 FY2021) | Segment | Q3 FY22 Adjusted EBITDA | Q3 FY21 Adjusted EBITDA | | :--- | :--- | :--- | | Consulting | $28.6M | $27.5M | | Digital | $28.1M | $27.1M | | Executive Search | $65.7M | $41.7M | | RPO & Professional Search | $44.1M | $19.6M | | Total Consolidated | $138.3M | $96.7M | - The RPO & Professional Search segment's significant revenue growth was partially driven by the acquisition of Lucas Group on November 1, 2021156 - Compensation and benefits expense increased by 37% for the quarter, primarily due to higher performance-related bonuses and increased headcount corresponding to revenue growth157 Liquidity and Capital Resources The company maintains a strong liquidity position with $1.11 billion in cash and marketable securities, supporting capital allocation activities including the Lucas Group acquisition, increased dividends, and share repurchases - As of January 31, 2022, cash, cash equivalents, and marketable securities were $1,107.3 million243 - The company has a $650.0 million revolving credit facility, with $645.3 million available for borrowing as of January 31, 2022239 - The Board of Directors increased the quarterly dividend by 20% to $0.12 per share, effective June 21, 2021240 - The company repurchased approximately $31.5 million of its stock during the nine months ended January 31, 2022, with $96.4 million remaining available under the share repurchase program241 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency fluctuations and interest rate changes, primarily related to its global operations and variable-rate revolving credit facility - The company's primary foreign currency exposures are to the Pound Sterling, Euro, Canadian Dollar, and Australian Dollar, among others A hypothetical 10% change in the value of these currencies could result in a foreign exchange gain or loss of $12.8 million262 - Interest rate risk is linked to the $650 million Revolver, which bears interest at LIBOR plus a margin (1.125% to 2.00%) As of January 31, 2022, there were no amounts outstanding under the Revolver263 Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of January 31, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of January 31, 2022266 - No material changes to internal control over financial reporting occurred during the three months ended January 31, 2022266 Part II. Other Information Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently engaged in any legal proceedings that are expected to be materially adverse269 Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 - No material changes to the risk factors described in the Form 10-K have occurred270 Issuer Purchases of Equity Securities This section details the company's common stock repurchases during Q3 FY2022, including 304,500 shares for $22.1 million, with $96.4 million remaining available under the program Share Repurchases (Quarter Ended Jan 31, 2022) | Period | Total Shares Purchased | Average Price Paid | Shares Purchased (Program) | Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | Nov 2021 | 52,500 | $80.47 | 52,500 | $114.3M | | Dec 2021 | 81,453 | $75.56 | 80,000 | $108.2M | | Jan 2022 | 173,056 | $69.06 | 172,000 | $96.4M | | Total | 307,009 | $72.74 | 304,500 | $96.4M | - The share repurchase program has no expiration date Repurchases are permitted as long as the company meets certain leverage and liquidity covenants under its Credit Agreement and Notes indenture272273 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents for financial reporting - Key exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and Inline XBRL data files (Exhibits 101 and 104)275