Korn/Ferry 4Q Profit Doubles

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Jun 15, 2011

Executive recruiting firm Korn/Ferry International said Wednesday in a live webcast to investors that its profit more than doubled in its fiscal fourth quarter, a positive sign that more companies are hiring, at least on the executive level.

The company also offered first-quarter guidance above expectations, and its shares climbed 7 percent in midday trading.

While the country is still struggling with high unemployment levels, Korn/Ferry, which focuses on executive-level employees such as chief financial officers or board directors, has bounced back. The results mark the third straight quarter that its net income has more than doubled from a year earlier since it returned to a profit in the first quarter of the year.

“I am enormously proud of the Korn/Ferry organization,” said Gary Burnison, Chief Executive Officer, Korn/Ferry International. “Once again, our growth was driven by the strength of our differentiated strategy. Thanks to the dedication of our colleagues in serving our clients, we achieved an operating margin of almost 12% for the full year. As we enter a new fiscal year, we will continue to build a Korn/Ferry brand that is synonymous with talent management, assisting our clients in linking their business, and people strategies.”

Net income rose to $20.3 million, or 43 cents per share, for the quarter ended April 30 from $8.9 million, or 19 cents per share, a year ago. Excluding one-time tax adjustments, earnings totaled 39 cents per share. That beat the 32 cents per share analysts expected, according to FactSet. Analysts typically exclude one-time items. Revenue rose 16 percent to $205.8 million from $176.9 million a year earlier.

Fees, which make up the bulk of the company’s revenue, rose 17 percent to $197.3 million. There was a 12 percent increase in the number of executive recruitments billed and a 2 percent increase in average fee per executive engagement.

For the year, net income rose to $58.9 million, or $1.27 per share, from $5.3 million, or 12 cents per share, a year earlier. Annual revenue rose 30 percent to $744.2 million from $572.4 million a year ago.

The Los Angeles company predicts net income of 30 cents to 36 cents per share for the first quarter. Analysts expect 31 cents per share.

Shares rose $1.53, or 7.1 percent, to $23.05 in midday trading. The stock has traded between $12.78 and $24.77 over the past 52 weeks.

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