Korn Ferry

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry first quarter fiscal year 2022 conference call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded for replay purposes. We have also made available in the investor relations section of our webcast at KornFerry.com a copy of the financial presentation that we'll be reviewing with you today. Before I turn the call over to your host, Mr. Gary Burnison, let me first read a cautionary statement to investors. Certain statements made in the call today, such as those relating to future performance plans and goals, constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the company's control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation and in the periodic and other reports filed for the company with the SEC, including the company's annual report for fiscal year 2021 and in the company's soon to be filed quarterly report for the quarter ended July 31st, 2021. Also, some of the comments today may reference non-GAAP financial measures such as constant currency amounts, EBITDA and adjusted EBITDA. Additionally, information concerning these measures, including reconciliations to the most directly comparable GAAP financial measures, is contained in the financial presentation and earnings release relating to this call, both of which are posted in the investor relations sections of the company's website at cornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison.

Okay, thank you Cynthia and good morning and thank you everybody for joining us. I guess I'd first say that it's pretty clear the diversity and the relevancy of our offerings as well as the outstanding effort from our colleagues has resulted in another great quarter. Our strategy and efforts are clearly yielding results as we delivered a 70% increase in fee revenue with really strong profitability. of $1.37 and an adjusted EBITDA margin of 20.7%. And these results are the continuation of our momentum over recent quarters. And our performance speaks to our agility and importantly, to the purposeful decisions and deliberate actions we've taken not only over the last few quarters, but over the last several years. And now they've come together. in a critical mass of opportunity. As a result, today's Korn Ferry is poised to seek the opportunities of tomorrow. And those opportunities begin with a world of work that's in a massive state of transition. And maybe always will be. Companies re-imagining their businesses from strategy to people to culture, career nomads, aging demographics, a real war for talent. work from anywhere anytime and last but not least the digitization of everything these are the features of our new landscape of work and we don't see that changing anytime soon you know in response companies are rethinking their org structures their roles responsibilities how they compensate engage motivate and upskill their workforce as well as the type of agile talent they hire and how they hire that talent. And they're all going to need to lead differently. And as I said, this new world is creating opportunities for Korn Ferry. The mega changes that I described aligned very nicely with our businesses. Today, wherever and whenever leadership meets talent, Korn Ferry is at that cross section, enabling agility in a world in transition and driving performance for our clients. To position our company for long-term success, we remain relentlessly focused on this dynamic world of work. Our scaled capabilities include org strategy, leadership and professional development, assessment and succession, and rewards and talent acquisition. And of course, the judgment and expertise built from decades of experience and insight into the questions companies are grappling with across industries. We're going to continue to drive an integrated go-to-market strategy through our marquee and regional accounts, which represent about 35% of our portfolio. And this facilitates not only growth and enduring partnerships, but also is key to more scalable and durable revenues. In the quarter, about 30% of our revenue was driven by cross-referrals and all-time highs. which I think demonstrates the effectiveness of our go-to-market strategy. Today, the fight for talent is absolutely more profound than we've ever seen. This new world is driving a robust market for our talent acquisition expertise. From executive search to pro search to RPO, we're helping companies find the right talent, fitting the right need. In looking at our digital and consulting businesses, We've been actively marrying our capabilities with today's mega trends. The result is larger projects with greater sustainability and more durable revenue in areas such as D&I and organizational transformation, as well as core solutions such as assessment, pay and governance, and leadership and professional development. Looking ahead, I truly feel we have the right strategy. with the right people at the right time to help our clients drive performance in this new world. And our results are clearly affirming this belief. With that, I'm joined by Greg Kovochuk and Bob Rozak. And Bob, I will turn it over to you.

Great. Thanks, Gary. And good afternoon or good morning, depending on where you're calling in from. You know, our financial results in the first quarter were outstanding, and they continue to push to new highs. Our unique mix of organizational consulting solutions continue to grow in relevance, and that gives us a greater share of strengthening global markets. Clients are embracing our solutions to help them navigate today's unprecedented and rapidly changing work and social environment, and that's driving our fee revenue and profitability to new heights. Now, let me touch on a couple of highlights from the first quarter. You know, as Gary mentioned, fee revenue in the first quarter was up $241 million, or 70% year over year, and $30 million, or 5% sequentially, and that's reaching an all-time high of $585 million. Now, that's quite an accomplishment, hitting consecutive highs in only the third and then fourth quarter removed from the trough. Consolidated fee revenue growth in the first quarter measured year over year was up 81% in exec search, 103% in RPO and pro search, 50% in consulting, and 44% in digital. Also, our new business growth in the first quarter was very strong. Our results continue to demonstrate the success of our go-to-market strategy. Revenue generated from our marquee and regional accounts continues to steadily grow. In the first quarter, revenue from our marquee and regional accounts was up 70% year over year and 4% sequentially. And as Gary mentioned, in the first quarter, over 35% of our consolidated fee revenue was generated from these accounts. In addition, cross-line of business referrals continue to grow. In the first quarter, about 30% of fee revenue was generated from cross-line of business referrals, which is up from 25.5% and 28.5% in the first and fourth quarters of fiscal 21, respectively. Now, earnings and profitability also reached new highs in the first quarter. Adjusted EBITDA grew $111 million year over year and $8.5 million or 7.5% sequentially to $121 million with an adjusted EBITDA margin of 20.7%. Now that's our third consecutive quarter with an adjusted EBITDA margin over 20%. Our earnings and profitability continue to benefit from higher consultant and execution staff productivity and lower G&A spend driven by virtual delivery processes and reduced levels of related business development spend. Fully diluted earnings per share also reached a record level in the first quarter, improving to $1.37, which was up from $1.56 compared to adjusted fully diluted earnings per share in the first quarter of fiscal 21. and up 16 cents or 13% sequentially. I would like to point out that in the first quarter, our fully diluted earnings per share benefited by 7 to 8 cents from a lower tax rate of 23.8%. Now, currently, we don't believe that this rate is sustainable. And for all of fiscal 22, we're projecting an effective tax rate in the range of 26 to 27%. Now turning to new business, which also grew to record levels by accelerating each consecutive month of the quarter. We're pleased to share that our new business generation in each of the last six months is in our top 10 ever, with three of the months occupying spots one, two, and three. Now that's a clear demonstration of the relevance of our solutions in the world today. Now more specifically on a consolidated basis, new business awards, excluding RPO, were up 59% year over year and up approximately 2% sequentially. New business growth was strongest for professional search, which was up 14% from the fourth quarter of fiscal 21. RPO new business had another strong quarter in the first quarter with $113 million of total contract awards. Our investable cash balance also improved. At the end of the first quarter, cash and marketable securities totaled $904 million. Now, when you exclude amounts reserved for deferred comp arrangements and for accrued bonuses, the global investable cash balance at the end of the first quarter was approximately $614 million, which is up $103 million, or 20% year over year. Now, of that amount, approximately $220 million was in the United States. It continues to be our priority to invest back into our business, and that's to maximize our future growth. This includes the hiring of additional fee earners and execution staff. Over the last quarter, total new fee earner consultants grew by 127, which includes both new hires and recent promotions. Additionally, consistent with our balanced approach to capital allocation, we repurchased approximately $3 million of stock in the first quarter and paid a quarterly cash dividend of approximately $6.9 million. With that, I'll turn the call over to Greg to review our operating segments in more detail. Thanks, Bob.