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Korn/Ferry Q3 fee revenue $249.5 million

Staff writer |
Korn/Ferry International announced third quarter fee revenue of $249.5 million and diluted earnings per share of $0.46.

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Fee revenue was $249.5 million in Q3 FY 2015, an increase of $7.3 million, or 3.0% ($16.4 million, or 6.8% on a constant currency basis), compared to Q3 FY 2014, primarily due to increases of $5.8 million and $2.1 million in fee revenue in Futurestep and Leadership & Talent Consulting, respectively, partially offset by a decrease of $0.6 million in Executive Recruitment.

The overall fee revenue increase was driven by fee revenue growth in certain of our major markets – industrial and life science/healthcare, partially offset by declines in technology and education/non-profit.

Compensation and benefit expenses were $164.7 million in Q3 FY 2015, an increase of $2.5 million, or 1.5%, compared to the year-ago quarter. The increase was driven by higher performance related bonus expense resulting from an increase in fee revenue and profitability as a result of the continued adoption of our strategy, including referrals between lines of business.

Salaries and related payroll taxes were also higher due to an increase in the average headcount in Executive Recruitment and Futurestep in Q3 FY 2015 compared to Q3 FY 2014, reflecting our continued growth-related investments back into our business. These increases were partially offset by a decline in the fair value of vested amounts owed under certain deferred compensation plans.

General and administrative expenses were $36.8 million in Q3 FY 2015, a decline of $0.4 million, or 1.1%, from Q3 FY 2014, mainly due to a decrease in marketing and business development costs and premise and office expenses of $1.0 million and $1 million, respectively. These declines were partially offset by an increase in professional fees, primarily to drive our strategic initiatives and acquisition related costs.

Adjusted EBITDA was $39.1 million in Q3 FY 2015, an increase of $3.9 million, or 11.1%, compared to Q3 FY 2014. Adjusted EBITDA margin was 15.7% and 14.5% in Q3 FY 2015 and Q3 FY 2014, respectively.

The increase in Adjusted EBITDA was primarily driven by $7.3 million in higher fee revenue and a $0.8 million decline in general and administrative expenses (excluding acquisitio

Operating income was $32.9 million in Q3 FY 2015 and $27.3 million in Q3 FY 2014 resulting in an operating margin of 13.2% in Q3 FY 2015 compared to 11.3% in the year-ago quarter. Operating income was impacted by all of the above items with the exception of other income, which is not included in operating income.


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