Korn ferry announces fourth quarter and fiscal 2021 results of operations
Los angeles--(business wire)--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 %
