20131204-汤森路透-EDITED_TRANSCRIPT_KFY_-_Q2_2014_Korn_Ferry_Earnings_Conference_Call_15页_273kb

Korn Ferry Q2 2014 Earnings Conference Call Summary

Core Content

Korn Ferry International reported its second-quarter fiscal year 2014 results on December 4, 2013, highlighting strong revenue growth and strategic progress across its business segments. The company emphasized its focus on integrating acquired businesses and leveraging its intellectual property (IP) to drive growth and profitability.

Key Financial Highlights

• Revenue: $238 million for Q2 2014, up 23% year-over-year (YoY) on a constant currency basis and 4% sequentially.
• GAAP Operating Earnings: $23.2 million
• GAAP Diluted EPS: $0.38
• Adjusted Diluted EPS: $0.41
• 3Q14 EPS Guidance: $0.30 to $0.38
• Annualized Revenue: $952 million
• Annualized Adjusted EBITDA: $150 million
• Adjusted EBITDA Margin: 15.5%, up from 12.5% YoY and 14% in the previous quarter.
• Total Cash and Marketable Securities: $315 million at the end of Q2 2014, up $35 million from Q1 2014 and down $17 million from Q2 2013.
• Investable Cash (excluding deferred comp and bonuses): $127 million, down $6 million from Q1 2014, with 22% in the U.S.

Business Segments Overview

Executive Search

• Revenue: $140 million in Q2 2014, up 2.4% sequentially and 9.6% YoY.
• Adjusted EBITDA: Improved by $7.4 million or 31.7% YoY, reaching $21.9 million.
• Adjusted EBITDA Margin: 21.9%, down from 23.3% in Q1 2014 and 18.2% in Q2 2013.
• New Search Assignments: 1,300 in Q2 2014, up 11% YoY and 7% sequentially.
• Consultants: 412 dedicated consultants at the end of Q2 2014, up 10% YoY and down 4% sequentially.

Leadership and Talent Consulting (L&TC)

• Revenue: $66 million in Q2 2014, up 9.7% sequentially.
• Adjusted EBITDA: $10.2 million, up 21.7% sequentially from Q1 2014.
• Adjusted EBITDA Margin: 15.5%, up from 14% in Q1 2014 and down from 20.7% in Q2 2013.
• Consultants: 129 dedicated consultants at the end of Q2 2014, up 500 basis points sequentially in utilization.
• Regional Growth: North America (up 8.7% YoY), Europe (seasonally weaker), Asia-Pacific (up 25.1% YoY), South America (up 42.1% YoY).

Futurestep

• Revenue: $31.9 million in Q2 2014, up 7.9% YoY and 60 basis points sequentially.
• Adjusted EBITDA Margin: 9.3%, down both sequentially and YoY due to start-up costs from new RPO contracts.
• Backlog: Significant growth in RPO assignments, with over 9,000 professionals to be recruited over the next 3-plus years.
• Expected Margin Recovery: Once RPO contracts are fully ramped, Futurestep's EBITDA margins are expected to return to the 12% to 14% range.

Strategic Initiatives

• Integration of Acquisitions: Korn Ferry integrated Global Novations and PDI Ninth House, which contributed to the 41% of revenue from non-Search services.
• Focus on IP and Technology: The company is investing heavily in IP and technology to differentiate itself and improve service offerings.
• One Korn Ferry Approach: The company is working to unify its brand and go-to-market strategies, presenting a single face to clients.
• Cost Efficiency: Post-acquisition integration has led to a more efficient cost base, improving profitability across segments.

Outlook for Q3 2014

• Fee Revenue Guidance: Expected to range from $221 million to $237 million.
• Diluted EPS Guidance: Expected to range from $0.30 to $0.38 per share.
• Holiday Impact: Reduced working days in Q3 due to the holiday season, which may impact new orders and revenue recognition.
• New Orders: November new orders were down from October but aligned with expectations.

Key Viewpoints

• Growth Strategy: Korn Ferry is focused on driving growth by linking business and talent strategies, leveraging its executive search business to open doors for broader talent solutions.
• Market Conditions: Despite the slow and steady growth narrative, the company is optimistic about long-term trends and the role of IP in sustaining growth.
• Client Engagement: The company is emphasizing cross-selling and integrated service offerings to enhance client value and profitability.
• Operational Improvements: Continued improvements in productivity and cost efficiency are expected to drive future profitability, especially as RPO contracts mature.

Summary of Key Information

• Growth Drivers: Executive search, leadership consulting, and Futurestep RPO contracts.
• Margin Challenges: Futurestep faced margin pressure due to start-up costs and revenue recognition timing.
• Cultural Integration: The company is working to align its internal culture and client-facing strategies as it unifies its brand.
• Financial Position: Improved cash reserves and profitability, with continued focus on cost management and IP investment.