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Korn Ferry reports Q3 fee revenue of $344.2m

Korn/Ferry International has announced its third quarter results, reporting record fee revenue of $344.2m.


The acquisition of Hay Group was completed on 1st December 2015. Excluding legacy Hay Group, fee revenue was $272.3m, an increase of 14.0% on a constant currency basis (9.1% at actual exchange rates) from Q3 FY15. Korn Ferry claim the increase was driven by continued strong performance in the North America region of executive recruitment (20.9% on a constant currency basis) and the Futurestep segment (23.7% on a constant currency basis).


Legacy Hay Group produced an adjusted EBITDA margin of 11.0% on a standalone basis. Combined with the legacy leadership & talent consulting segment, the new combined Hay Group segment produced an Adjusted EBITDA margin of 15.6% in Q3 FY16. Korn Ferry consolidated adjusted EBITDA margin was 13.6% in Q3 FY16.


Third quarter FY16 diluted loss per share was $0.30. Adjusted diluted earnings per share was $0.52 in Q3 FY16, excluding $58.3m of restructuring charges, integration/acquisition and separation costs, and a deferred revenue adjustment related to the Hay Group acquisition, compared to diluted earnings per share of $0.46 in Q3 FY'15.


The company declared a quarterly dividend of $0.10 per share on 8th March 2016, payable on 15th April 2016 to stockholders of record on 25th March 2016.


Gary D. Burnison, CEO, Korn Ferry, said, "Despite the threat of economic contagion at the beginning of this calendar year, I am pleased to report 14% year over year growth in fee revenue at constant currency in our third fiscal quarter – excluding the legacy Hay Group business. Combined, adjusted fee revenue for the quarter was $350 million.


"We have successfully completed the initial synergy phase of our combination with Hay Group, which is partially reflected in the new combined Hay Group segment Adjusted EBITDA margin of 15.6% in the quarter.  Over the last few weeks, we have launched phase two of our Hay Group unification, which incorporates growth areas such as the expansion of our intellectual property, solutions and offerings.  Our intent is to substantially complete the last phase of our integration activities by July 31, 2016, which will be eight months from the closing date of the transaction. 


"After a short 90 days with Hay Group, I am more confident than ever that we are creating the preeminent global people and organizational advisory firm.”


The $344.2m fee revenue is on a U.S. GAAP basis and $350.1m on an adjusted basis (includes $5.9m in deferred revenue adjustment related to the Hay Group acquisition).


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