Korn/Ferry International (KFY)

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Korn/Ferry International (KFY)

F1Q10 Earnings Call

September 09, 2009; 12:00 pm ET


Gary Burnison - Chief Executive Officer

Steve Giusto - Chief Financial Officer

Gregg Kvochak - Senior Vice President


Andrew Fones - UBS

Kevin McVeigh - CSFB

Clinton Fendley - Davenport

Mark Marcon - R.W. Baird

Ty Govatos - C.L. King



Ladies and gentleman thank you for standing by and welcome to the Korn/Ferry International conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and as a reminder this conference is being recorded.

Before I turn the call over to your host, Mr. Gary D. Burnison, let me first read the cautionary statement to investors. Certain statements made in the presentation today will 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 the 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 in the company’s Annual Report for fiscal 2009, and in the other periodic reports filed by the company with SEC.

With that said, I’ll turn the call over to Mr. Burnison; please go ahead sir.

Gary Burnison

Well thank you Kathy and good morning to all of you. Today we are please to report our first sequential quarterly revenue gain in over a year. I don’t need to say that the past 12 months have been a high speed ride for almost every business around the world, and certainly we’re no exception.

It was less than a year ago that we were producing the most revenue and cash flow in the company’s history, and then just 60 days later our industry was off well over 40%. Unemployment in the U.S. and around the world had risen dramatically, the global equity markets cratered, credits have operated and consumer confidence plunged.

For the second quarter of this calendar year the association of executive search consultants, the AESC which is our trade organization reported that the search industry was down nearly 50%. Despite the environment, and the fact that we’ve had to eliminate over $300 million from our cost structure and have asked our colleagues to make significant, personal sacrifices, I am prouder today of our organization than I have ever been.

As I previously talked about publicly, our goal during this unprecedented time would be to preserve the franchise, position the company for growth, and accelerate through the economic turn. We established an operating boundary of positive cash flow, which we’ve clearly achieved; in fact we ended the quarter with $266 million in cash, substantially higher than forecast.

Over the past year we have been able to outperform the competition, uphold our number one market share and manage our balance sheet. Great companies make their best moves in this kind of environment and despite the recession, we have made true progress against our strategy, to further transform Korn/Ferry and the industry.

We have made two acquisitions in this down market, driven initiatives to extend the brand and made significant progress towards strengthening our own talent. Our vision and strategy have remained consistent. Our revision is to be the premier global provider of talent management solutions. We’re absolutely confident, that we are poised for long term growth, by following the following six core strategic initiatives.

First, institutionalizing how we go to market, bringing consistency and measurability to our client targeting development and execution on a global basis, and integrating all of our businesses. Second, to continue to deliver unparallel client excellence, by incorporating our research based leadership IP into our recruiting processes, and through our new state of the art technology platforms.

We are also extending and elevating the brand, using our research and subject matter experts, through a vast array of online and offline events, publishing and social media initiatives. Our work in the CEO and Board space remains robust. We are currently working on 28 succession projects, to a variety of clients; revenues are up over 20% in this solution.

Our team has leveraged, alarming our IP in building a world class succession offering, and with the addition of Whitehead Mann, we now greatly expand our penetration throughout EMEA.

Fourth, we are going to continue to scale our leadership and Futurestep businesses. If you look at the diverse array of talent management offerings that we’ve developed over the past coupled of years, it’s absolutely remarkable. Today’s Korn/Ferry offers a comprehensive suite of solutions organized around strategic and organizational alignment, leadership and executive development, and talent and performance management. In fact, since the outbreak of this great recession, our leadership business has performed remarkably well.

Our recruitment in mid level search business Futurestep was up 3% sequentially due primarily to significant wins and improvement in Asia. Organizations are increasingly calling on Futurestep to discuss their overall talent architecture, and during the quarter we secured three notable, long term RPO assignments. We are going to continue to be steadfast in pursuing transformational opportunities along the broad HR spectrum, giving our consultants reasons to talk to clients throughout the whole year.

I’m pleased to report that the integration of Whitehead Mann has proceeded according to plan. We now have a platform to drive sustainable number one market share position across AMEA and in particular, the U.K. and France, and finally we are striving to create a lifetime career destination for our colleagues. I’m convinced, that backed by a world class brand in our significant financial position. The firm has remained in a superior position for attracting people.

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