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Korn Ferry record Q2 results

Staff writer |
Korn Ferry announced record second quarter results with fee revenue of $238 million and adjusted diluted earnings per share of $0.41, excluding separation charges of $2 million.

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Including such charges, diluted earnings per share was $0.38 in the three months ended October 31, 2013. Fee revenue was $238 million in Q2 2014, an increase of $41.8 million, or 23% on a constant currency basis (21% at actual exchange rates), compared to Q2 2013, primarily due to an increase of $27.6 million and $12.3 million in fee revenue in Leadership & Talent Consulting and Executive Recruitment, respectively.

The overall fee revenue increase was driven by fee revenue growth in the life science/healthcare, industrial, technology and financial services sectors. Excluding the PDI Ninth House and Global Novations acquisitions, fee revenue increased 7% in Q2 2014 compared to the year-ago quarter (8% on a constant currency basis) to $204.7 million in Q2 2014 from $191.0 million in Q2 2013.

Compensation and benefit expenses were $161.3 million in Q2 2014, an increase of $28.2 million, or 21%, compared to Q2 2013. The prior year acquisitions contributed $14.5 million to the increase in compensation and benefit expenses. The remainder of the increase was due to an increase in performance related bonus expense, salaries and related payroll taxes and an increase in expense associated with company contributions to deferred compensation plans.

The increase in the performance related bonus expense resulted from an increase in fee revenue and profitability. The increase in salaries and related payroll taxes was due to an increase in the headcount in both Futurestep and Leadership & Talent Consulting.

General and administrative expenses were $35.8 million in Q2 2014, an increase of $2.4 million, or 7%, compared to Q2 2013. The prior year acquisitions contributed $3.6 million to the increase in general and administrative expenses in Q2 2014 compared to Q2 2013.

Excluding the costs from the prior year acquisitions, there was a decline in general and administrative expenses of $1.2 million during the same period. The decline was due to a gain as a result of favorable exchange rates in Q2 2014 compared to Q2 2013 and a decrease in business development expenses.

Adjusted EBITDA was $36.7 million in Q2 2014, an increase of $12.3 million, or 50%, compared to Q2 2013. Adjusted EBITDA margin was 15.4% and 12.5% in Q2 2014 and Q2 2013, respectively.

On a GAAP basis, operating income was $23.2 million in Q2 2014, an increase of $20.4 million, or 729%, compared to Q2 2013 resulting in a margin of 9.7% in the current quarter compared to 1.4% in the year-ago quarter.


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