Korn/Ferry Int'l Third Quarter Results Top Estimates, Guides Q4 In Line

(RTTNews) - Talent recruiter Korn/Ferry International (KFY) reported Thursday a profit for the third quarter that more that doubled from last year, reflecting significantly improved operating margins and strong fee revenue growth. Both adjusted earnings per share and quarterly revenues topped analysts' expectations. The company also provided earnings and revenue guidance for the fourth quarter of fiscal 2014, in line with Street view.

"Korn Ferry had a strong third quarter, with year-over-year growth across all lines of business and within every region. We generated the strongest topline results in the company's history, representing a 21% year-over-year increase in fee revenue, or 14% adjusting for the PDI Ninth House acquisition, on a constant currency basis, generating higher earnings per share," CEO Gary Burnison said in a statement.

The Los Angeles, California-based talent management solutions provider posted net income of $21.3 million or $0.43 per share for the third quarter, higher than $9.5 million or $0.20 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $21.3 million or $0.43 per share, compared to $15.0 million or $0.31 per share in the year-ago quarter.

On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.34 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter grew 19 percent to $250.94 million from $210.27 million in the same quarter last year, and topped four Wall Street analysts' consensus estimate of $229.23 million.

Fee revenue for the quarter increased 20 percent to a record of $242.18 million from $202.00 million in the prior-year quarter. Excluding the PDI Ninth House acquisition, fee revenue increased only 12 percent.

Reimbursed out-of-pocket engagement expenses totaled $8.75 million, up from $8.27 million last year.

Fee revenue in executive recruitment, leadership & talent consulting and futurestep services grew 10 percent, 51 percent and 18 percent, respectively.

Operating margin for the quarter improved 700 basis points to 11.3 percent from last year's 4.3 percent.

Looking ahead to the fourth quarter of fiscal 2014, the company expects earnings in a range of $0.35 to $0.41 per share, on projected fee revenues between $240 million and $250 million. Analysts currently expect the company to report fourth-quarter earnings of $0.37 per share on revenues of $240.98 million.

"In today's environment, global organizations must create growth opportunities that far outstrip the potential of the global economy - ultimately through people. Validated by our results, Korn Ferry's capabilities are being increasingly embraced by clients to unlock growth through innovative talent strategies," Burnison added.

KFY closed Thursday's regular trading session at $25.83, up $0.07 or 0.27% on a volume of 0.39 million shares. The stock gained a further $1.15 or 4.45% in after-hours trading.