Korn Ferry

Ladies and gentlemen, thank you for standing by and welcome to the Korn Ferry fourth quarter in full 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 website at KornFerry.com a copy of the financial presentation, that we will be reviewing with you today. Before I turn the conference over to your host, Mr. Gary Burnison, let me first read the 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 by the companies with the SEC, including the companies soon to be filed annual report for the fiscal year 2022. Also, some of the comments today may reference non-GAAP financial measures, such as constant currency amounts, EBITDA and adjusted EBITDA, additional information concerning these measures, including reconciliations to the most direct comparable gap financial measure, is contained in the financial presentation and earnings release relating to the call, both of which are posted in the investor relations sections of the company's website at www.cornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr. Burnison.

Thank you, Tani. Good afternoon, everybody, and thanks for joining us. As I look back on the last 12 months, our vision to become the premier organizational consultancy is clearly working. And for that, I'm incredibly proud of our company, of our colleagues, and all of our accomplishments. You know, our performance has been outstanding. During the fourth quarter, we generated $721 million in fee revenue, a new high. up 33% at constant currency, and our profitability was also very strong. And our performance has been consistent. For example, our 10-year CAGR has been 13%, while our 20-year CAGR has been 10%. And during this time, we've seen our top line grow by more than sevenfold. A major account strategy that now represents 36% of our portfolio. Consulting and digital capabilities that represent 38% of our firm. An integrated go-to-market strategy, one corn ferry that has resulted in almost 30% of our revenue coming from cross-line of business referrals. A new corn ferry that trains and develops over 1 million professionals a year. A compensation and rewards advisory, a digital offering with comp data that on more than 25 million executives, a new interim transition management and staffing capability with over $110 million of annual revenue on a run rate basis, and the continued execution of our balanced, disciplined approach to capital allocation. And yet with this transformation, we're still at the very beginning of what Korn Ferry will be, and therefore with much tangible opportunity ahead. The world and our clients have entered a new reality, a fight for not only growth, but relevancy and profitability. Faced with this reality, clients will have to rethink all aspects of their strategy, including their organizational leadership and talent components needed to drive success. We're also in an era in which shortages of skilled labor are projected to persist. If history repeats itself, the labor participation rate will unlikely reach the level it was before the pandemic, thereby compounding the current supply, demand, and balance. We've also used this time of change as an opportunity to continue to evolve our strategy and reimagine our business. This includes broadening the scope of our offerings in professional search and interim services with two strategic acquisitions in the last six months alone. Today, boomers are retiring and career nomads are looking for change early and often. And our strategic moves, approach, and offerings reflect this dynamic. We're going to continue to invest heavily in expanding our suite of technological and digital capabilities. helping to transform the way our clients succeed in this new world. To fulfill our vision and further position our company for long-term success, we remain relentlessly focused on meeting the evolving needs of our clients, which includes continuing to drive an integrated go-to-market strategy through our marquee and regional accounts. This not only facilitates growth, but is also the key to more scalable and durable revenues. Our 350 marquee and regional accounts continue to demonstrate the power and value of these relationships, generating more than $950 million in revenue, last year utilizing our global capabilities even during differing economic periods. Looking to the fiscal year ahead, I truly feel we have the right strategy with the right people the right time to help our clients drive performance in this new world. Korn Ferry is indeed poised for even greater things to come. And before I turn the call over to Bob Rozak and Greg Kubocak, let me just say that our thoughts continue to be with those in the Ukraine, including our colleagues, as well as those that have been impacted by the senseless and tragic tragic shootings over the last several weeks. With that, Bob, I'll turn it over to you.

Great. Thanks, Gary, and good afternoon or good morning, depending where you are in the world. As Gary said, we've entered a new reality in the world of work, an era where social, political, and demographic shifts have created what are projected to be permanent shortages in skilled labor and and really changing attitudes towards how and where work gets done. The reality is in the post-COVID economy, regardless of level of economic activity, we anticipate many of these changes are here to stay and will force organizations to reevaluate all aspects of their talent strategy. And as I like to tell everybody, this is not our 15 minutes of fame. The changes that I'm speaking about are real and they're here to stay. And with our unmatched collection of talented colleagues, intellectual property, data, other assets, we are uniquely positioned to partner with our clients and lead them through their talent transformation journey. Our portfolio solutions have never been more relevant and our top line more durable. We are thriving in today's new world, harvesting years of investment in intellectual property, people, data, and processes. And we're well positioned for sustained future success backed by a powerful brand and a proven operating model. You know, I often say the best way to measure success is through performance. And when you look at our Q4 and full year FY22 performance, I mean, it really is the definition of success. And it's indisputable proof that we are executing successfully the right strategy, and that it's a winning strategy. Now, in the fourth quarter, we once again achieved new highs for new business fee revenue, adjusted EBITDA, and adjusted diluted earnings per share. Fee revenue reached a new high of $721 million, and that was up $166 million, or 33% year-over-year at constant currency, and up $40 million, or 6% sequentially. Nearly every line of business achieved a new fee revenue high led by RPO and professional search and executive search, which grew 77 percent and 22 percent, respectively. Growth for our consulting and digital businesses was also strong year over year at 13 percent and 11 percent, respectively. And then for all of fiscal 22, our consolidated fee revenue grew over 45 percent to a new high of $2.63 billion. New business also reached a new quarterly high in the fourth quarter for the whole company, as well as for nearly every line of business. By month, strong new business in February was actually followed by an all-time record month of March and a very strong but sequentially lower April, which is kind of our normal seasonal pattern in the fourth quarter. RPO new business remained exceptionally strong in the fourth quarter with $213 million of new contract awards, easily the best performance to date. Our earnings continued to scale with the revenue growth. Adjusted EBITDA grew over $31 million or 28% year-over-year to $144 million with an adjusted EBITDA margin of 20%. Our earnings and profitability continue to benefit from both higher consultant and execution staff productivity, as well as our disciplined G&A spending. And these efficiency drivers throughout fiscal 22 help grow our adjusted EBITDA to $539 million with a 20.5% adjusted EBITDA margin. And finally, our adjusted fully diluted earnings per share also reached a new high in the fourth quarter and for the full year of fiscal 22. Fourth quarter adjusted fully diluted earnings per share grew to $1.75, improving 54 cents or 45% year over year and 10% sequentially. For all of fiscal 22, adjusted fully diluted earnings per share grew to $6.23, which was up $3.72 or nearly $100. and 50% year-over-year. Our investable cash position remains strong. At the end of the fourth quarter, cash and marketable securities totaled about $1.2 billion, and when you exclude amounts reserved for deferred compensation arrangements and accrued bonuses, our global investable cash balance at the end of the fourth quarter was approximately $605 million. Our capital deployment in both the fourth quarter and for all of fiscal 22, continues to demonstrate the discipline and execution of our balanced capital allocation policy. Now, in the fourth quarter alone, we repurchased 1,035,000 shares of stock and used about $67 million to do that, paid a cash dividend of about $6.8 million, and we deployed $42 million for the acquisition of the Patina Solutions Group, For all of FY22, we repurchased about 1.47 million shares of stock using about $99 million in cash. We paid cash dividends of almost approximately $27 million and deployed about $134 million for M&A. Additionally, we funded $46 million of capital expenditures, most of which was directed to development activities for our emerging digital business. And finally, I'm pleased to announce that our board of directors has recently approved the authorization of an incremental $300 million for share repurchases and a 25% increase in our quarterly dividend, raising it to 15 cents per share. Continued investment in the business Effective deployment of cash, strong cash generation, and a resilient balance sheet positions us extremely well for the future. With that, I'll now turn the call over to Greg to review our operating segments in more detail.