March 7, 2018 – Korn Ferry (NYSE:KFY) has posted 2018 fiscal third quarter revenues of $448 million, a 17 percent increase compared to revenues of $381.9 million a year ago. Wall Street expected revenues of $416.5 million. Organic growth occurred in all three lines of business as compared to last year, with Futurestep growing 29.4 percent, executive search expanding 18.1 percent, and Hay Group increasing 12.7 percent.
The Los Angeles-headquartered executive recruiter and leadership consultant – the largest in the Americas as ranked by Hunt Scanlon Media – recorded net income of $27.2 million, or 48 cents per share, compared to earnings of $23.9 million for the quarter, or 53 cents per share, last year. Earnings, adjusted for pretax expenses and costs related to mergers and acquisitions, came to 70 cents per share. The results matched Wall Street expectations. The average estimate of four analysts surveyed by Zacks Investment Research was also for earnings of 59 cents per share.
“I am pleased to report 17 percent year over year growth for our recently completed third quarter, with fee revenue of $448 million and solid profitability, including diluted earnings per share and adjusted diluted earnings per share of $0.48 and $0.70 and adjusted EBITDA of approximately $70 million,” said CEO Gary D. Burnison. “Today Korn Ferry is truly a global organizational consulting firm. We help companies design their organization – the structure, the roles and responsibilities, as well as how they compensate, develop and motivate their people.”
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As importantly, he added, “We help organizations select and hire the talent they need to execute their strategy. I’m pleased with the trajectory of our firm and our continued momentum as we enable people and organizations to exceed their potential.”
Hedge Fund Investing Activity
Publicly held search firms, namely Korn Ferry and rival Heidrick & Struggles, have recently seen a flurry of investor activity. Hedge funds, in particular, have been acquiring new stakes in both companies, while others have been reducing positions and moving on to other investments throughout the talent management sector.
A number of institutional investors have recently added to or reduced their stakes in Korn Ferry’s stock:
Schwab Charles Investment Management recently raised its holdings in Korn Ferry by 1.4 percent. The institutional investor owned 348,934 shares of the company’s stock after acquiring an additional 4,939 shares during the period. Schwab Charles owned approximately 0.62 percent of Korn Ferry worth $14,439,000 at the end of the most recent reporting period. Bank of Montreal also boosted its position in shares of Korn Ferry by 94.4 percent. It now owns 84,056 shares of stock valued at $3,479,000 after recently purchasing an additional 40,827 shares.
Shelton Capital Management recently bought a new stake in the company worth $218,000. Public Employees Retirement System of Ohio also recently raised its stake in shares of Korn Ferry by 20.6 percent. It now owns 81,436 shares of stock worth $3,211,000 after purchasing an additional 13,925 shares. GSA Capital Partners recently raised its stake in shares of Korn Ferry by 123.7 percent. It now owns 55,496 shares worth $2,188,000 after purchasing an additional 30,689 shares. Lastly, Neuberger Berman Group recently increased its position in Korn Ferry by 4.5 percent. It now owns 50,325 shares valued at $1,984,000 after acquiring an additional 2,150 shares. Currently, 87.44 percent of Korn Ferry’s stock is currently owned by institutional investors.
Analysts Weigh In
Shares of Korn Kerry traded up $0.38 during mid-day trading on Tuesday, hitting $42.83. 348,064 shares of the company were exchanged, compared to its average volume of 302,897. The company has a current ratio of 1.94, a quick ratio of 1.94 and a debt-to-equity ratio of 0.20. Korn Ferry has a 12-month low of $29.84 and a 12-month high of $45.26. The firm has a market capitalization of $2.4 billion.
Several equity analysts have recently weighed in on the company. Zacks Investment Research recently upgraded Korn Ferry from a “hold” rating to a “buy” rating and set a $47.00 price objective for the company in a research report. ValuEngine downgraded Korn Ferry from a “strong-buy” rating to a “buy” rating. Robert W. Baird reissued a “hold” rating and issued a $37.00 price objective on shares of the firm in a recent research report. The company presently has a consensus rating of “Hold” and a consensus price target of $43.40.
Growth & Expansion
Korn Ferry said it expects revenue in the range of $448 million to $462 million for the fiscal fourth quarter. Analysts surveyed by Zacks had expected revenue of $436.9 million.
The search company’s shares have climbed almost five percent since the beginning of the year. In the final minutes of trading on Tuesday, shares hit $43.33, a climb of 40 percent in the last 12 months.
Korn Ferry has seen a wave of growth over the past several months. Here is a sampling of related articles from the Hunt Scanlon Media archives:
Just recently, Korn Ferry named Sharad Vishvanath as APAC regional head for its transformation and transaction (M&A) practice. Mr. Vishvanath brings to Korn Ferry over 20 years of experience across banking and consulting and has worked in multiple countries. He was previously with AU Small Finance Bank, a start-up bank in India.
Korn Ferry recently added Jill Wiltfong as its chief marketing officer. She is responsible for global brand and marketing strategy and is based in Los Angeles. Ms. Wiltfong brings to Korn Ferry over 20 years of marketing experience. She joined the firm from DEKRA Insight, where she was most recently SVP and head of business innovation and strategic marketing.
Dan Kaplan, former managing partner and head of the global chief HR officers practice at Heidrick & Struggles, has moved over to Korn Ferry’s CHRO practice. He is based in the firm’s New York office. Mr. Kaplan brings over 20 years of expertise in leadership and organizational consulting. He has advised CEOs, investors, boards and high-profile industry leaders on a wide range of issues.
Korn Ferry named Carlos Martins as president of Hay Group, South America. Mr. Martins joined the firm from global consulting firm Ernst & Young, where he led its people advisory services practice for South America and was also a member of the Brazil executive committee.
Korn Ferry also expanded with the addition of Mark Broer as senior client partner in its global life sciences practice and managing director of pharmaceuticals. He works in both the firm’s Zurich and London offices. He recently joined the firm after previously being with Spencer Stuart.
Korn Ferry also announced several key leadership changes in multiple areas. As the integration of Hay Group is substantially complete, the firm has appointed Mark Arian as this business segment’s new CEO. Mr. Arian was recently recruited from EY, where he served as a managing principal.
May Knight became country managing director for Hay Group. She is based in the company’s Hong Kong office. Ms. Knight brings 25 years of experience from operational and consulting roles in Asia and Europe. She was previously managing director, financial services, Asia Pacific at Accenture.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media