Korn/Ferry International Earnings Call Insights: Environment by Region and Global Novations
Environment by Region
Kevin McVeigh – Macquarie: Wanted to just get a sense – obviously it was a nice sequential uptick in new engagements we hadn’t seen that, in terms of strength it seems pretty encouraging. Just thoughts on the environment overall, and just if you could get specific by region, that would be helpful.
Gary Burnison – CEO: Well, we were encouraged us as well. When we look at the flagship business we saw very good sequential growth in almost every region, except for Europe that continues to be obviously, continues to be a challenge but we were particularly hardened by what we saw in North America in the quarter. When we just think about the organization overall, certainly Financial Services, as you all know, has been deeply, deeply challenged over the last several years. But on the other hand, for us, Life Sciences and Healthcare where I believe we’ve just got an incredible opportunity across all the businesses showed real strength in the quarter. And also we saw strength in Financial Services in North America in the quarter.
Kevin McVeigh – Macquarie: Gary, has this been first sequential uptick in Financial Services since the downturn?
Gary Burnison – CEO: I can’t say that off the top of my head. I wouldn’t want to call that, but it was certainly encouraging. One quarter doesn’t make a trend, but it was encouraging.
Kevin McVeigh – Macquarie: Then just, if I could real quick, I mean, real nice job on the margins and that was obviously with some investment in Leadership & Talent Consulting and then, it looks like the corporate line was high too. As it normalizes, can we expect just continued margin expansion?
Gary Burnison – CEO: Well, we hope so. We’ve made a number of strategic investments and acquisitions over the past two or three years. What we really haven’t done is fully integrated the support areas. The front office, we’ve gone all out, but in terms of the support areas, there is opportunity there, and that’s what Bob is driving. We’re going to continue to work at that, putting in process and systems to be able to really drive scale in the Company, and hopefully efficiency as well…
Robert Rozek – EVP and CFO: One of the things, Kevin, during the quarter, this is Bob – that we, Gary and I talked about doing was putting that integration on an accelerated path. So that’s sort of the playing field that we’re going after right now.
Kevin McVeigh – Macquarie: Got it. My last question, obviously there has been some rumors out there, one of your competitors potentially being acquired. Does that change the competitive landscape in terms of how you folks think about the positioning of the organization? Just any thoughts around that would be helpful.
Gary Burnison – CEO: No, not at all. We want to go in front of clients and broaden the conversation and really help accelerate their growth and that’s all we care about is our clients and our employees.
Frank Atkins – SunTrust: This is Frank in for Tobey. I wanted to ask about Global Novations. Can you give us any color there in terms of monthly revenue trends and kind of update how the integration and everything is going there?
Gary Burnison – CEO: Well, we do – no, we’re not going to give out any monthly trends, but I’ll tell you that overall this last fiscal year we made two strategic investments; two acquisitions overall and we feel stronger today about what those are going to do for this brand. Global Novations, when you really look at the organization delivers, half their businesses is kind of broad-based leadership development. The other half is in the same area, but geared towards cultural diversity, cultural dexterity and when you look out over this next decade, that’s one of the growth levers that CEO’s are going to continue to pull trying to drive borderless consumption, driving growth across borders. When we believe that we’ve got an offering that can accelerate a client’s ability to have a workforce to match that opportunity…
Frank Atkins – SunTrust: As you look out, where the portfolio sits right now. Are you pretty happy and pretty focused on integration? Are you looking at additional opportunities and what do you see out there right now?
Gary Burnison – CEO: Well, we continue to look and I think we’ve got very systematic approach for sure. But over the last few months really, since the last call for sure, I think that the leadership team has wholeheartedly, I mean just incredible job really driving go-to-market strategy, that’s anchored kind of for many to one from these different investments we’ve made. Bob’s done an incredible job in terms of driving the integration. As he said, I mean just think about it, a third of our workforce was actually relocated over the past 2.5 months and at the same time we were still able to drive organic constant currency growth. So, we got to continue to push that. Continue to push broadening the conversation, and developing our people.
Frank Atkins – SunTrust: Finally, could you talk a little bit about turnover in the quarter and what the hiring environment is now – their right now and what do you see?
Robert Rozek – EVP and CFO: This is Bob. Frank, I think as we look at our turnover that’s one of the metrics as we communicate with our Board at each quarter and year-end. We had very low turnover and then what we call our senior client partner level and ranks in fact it was probably less than 5%. So, we’re very pleased with our ability to attract individuals to the organization, but also to retain those folks. We really think the strategy and the platform that we’re building goes a long way to help us do that.
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