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Korn/Ferry International (KFY)
F1Q09 Earnings Call
September 9, 2008 9:00 am ET
Gary D. Burnison – Chief Executive Officer
Stephen Giusto - Chief Financial Officer
Kevin McVeigh - Credit Suisse First Boston
Tobey Sommer - Suntrust Robinson Humphrey
Michel Morin - Merrill Lynch
Mark Marcon - Robert W. Baird & Co., Inc.
David Feinberg - Goldman Sachs
Andrew Fones - UBS
Welcome to the Korn/Ferry International conference call. (Operator Instructions)
Previous Statements by KFY
» Korn/Ferry International F1Q10 (Qtr End 07/31/09) Earnings Call Transcript
» Korn/Ferry International F3Q09 (Qtr End 01/31/09) Earnings Call Transcript
» Korn/Ferry International F2Q09 (Quarter End 10/31/08) Earnings Call Transcript
With that, I'll turn the call over to Mr. Burnison.
Gary D. Burnison
Despite the continued unsteadiness in the global financial markets as well as normal summer seasonality, we're pleased to report that our business grew 11% in the quarter, with EPS of $0.36 a share, which is essentially flat from last year. The better news for us, however, was that our newer businesses - Futurestep and Leadership Development - were up 22% and 38%, respectively.
The quarter was driven by solid results in our executive recruiting business. Year-over-year, North America was up over 7%, Europe was up over 15% - 4% on a constant currency basis - and South America increased an impressive 33% on a constant currency basis.
From a markets perspective, our Industrial business remains our biggest market. Today our Industrial Sector represents almost 30% of the company. For the quarter, the industrial business was up 2% sequentially and 40% year-over-year. Conversely, the Financial Services segment is still struggling and was down 5% sequentially and down 8% year-over-year.
We have a very balanced portfolio, both from the solutions we offer as well as the global footprint in which we operate. Today, nearly 55% of our total revenue comes from outside of North America and over 20% of our revenues are being generated from offerings other than executive recruiting. In fact, for 19 consecutive quarters in a row here, Futurestep has grown the business sequentially. This quarter Futurestep grew 22% year-over-year, with a 9% operating margin. Our Leadership business continues to grow as well, reaching $18.1 million in the first quarter, about $72 million annualized, up 38% from the prior year. Lominger had its best profitability quarter in the company's history, with a 30% operating margin.
As we continue to evolve our organization we remain committed to our vision of being the premier global provider of talent management solutions, to be regarded as the top of mind brand in human capital, known for unsurpassed quality where the most talented colleagues serve our clients each day. Our mission is to enhance the lives of our clients, candidates and colleagues through our actions and the delivery of unsurpassed leadership and talent solutions.
We've laid the foundation for achievement of our vision through six primary areas. Over the next year we're going to continue to institutionalize how we go to market, trading a proactive consultative solutions based go to market approach. Next we're going to have a tenacious focus on client service and excellence and efficiency the Korn/Ferry way, part of which incorporates the Korn/Ferry advantage, the systematic approach to client delivery that we rolled out last year. We're going to continue to evolve the platform with new offerings and in fact over the next three quarters we're going to roll out a new state of the art information platform that we've been working on for the past 15 months or so.
Over the coming year we're going to continue to extend and elevate the Korn/Ferry brand. In a few weeks we're going to launch the Korn/Ferry Institute, which was founded to serve as the premiere global voice on a range of talent management and leadership issues. Our goal with the Institute is to commission and publish groundbreaking research as well as bring executives and professionals to the Institute for ongoing leadership training and development.
We're going to continue to scale our non-search businesses. In our Futurestep business, our outsourced recruiting business at the middle management level, our goal is to narrow our focus and concentrate on the RPO segment. In our Leadership business, we're going to expand our offerings to develop a fully integrated leadership consultancy with outstanding growth and profitability.
Finally, we're going to continue to pursue transformational opportunities along the broad HR spectrum. As we extend our brand, we're going to continue to identify adjacent talent base service capabilities that we can offer our clients.
By following this strategy, which has borne fruit for our firm over the past several years, we remain focused on the leadership and talent needs of our clients. The true measure of our success is reflected in our clients' ability to attract, retain and develop world-class talent. Of course, there's no way of knowing how long the economic environment will remain challenging, however we're convinced that our strategy will deliver long-term value for our shareholders, clients and colleagues.
And make no mistake. Regardless of whether the seas are choppy, our destination remains absolutely the same. We're going to create a multi-billion dollar diversified HR solutions business.