Korn/Ferry Intl Earnings Call Insights: Cash Plans, Sequential Change

On Wednesday, Korn/Ferry International (NYSE:KFY) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared with analysts and investors.

Cash Plans

Stephen Sheldon – William Blair: This is (Stephen Sheldon) in for Tim McHugh today. Could you provide a little more detail on what you’re seeing in the financial services sector probably and then maybe talk specifically about the sequential growth you saw in the sector in North America?

Gary Burnison – CEO: Well, the financial services sector is very challenged with a lot of regulatory uncertainty. I would assume that what we saw in the fourth quarter, we saw a sequential increase in financial services in both Asia and North America, and I wouldn’t expect that to continue. Our view is that market is going to continue to be challenged.

Stephen Sheldon – William Blair: Then your cash balance has grown considerably. Could you provide any detail on what you maybe planning to do with that cash?

Gary Burnison – CEO: Well, our first priority is to invest it in the business and we overall we see a $15 billion market opportunity we want to have 10% of it, and so first and foremost is to continue to look for ways to elevate and extend this brand and create a differentiated platform. So that is first and foremost. That’s what we have got to demonstrate a track record of doing and that’s what we are going to continue to do.

Sequential Change

Tobey Sommer – SunTrust Robinson Humphrey: Could you describe sequential change in confirmations as you got into April and May. I think I recall that historically April can see a little bit of sequential fall off even in a normal market let alone in uncertain one. So, any additional color you could provide will be useful?

Gary Burnison – CEO: I would say that, first of all, March was significantly higher than the past months before that. So, when I look at April and May, I would say that they are down about 10% from the prior call it five or six month trailing average, that’s kind of the way I would look at it. I think March was unusually strong.

Tobey Sommer – SunTrust Robinson Humphrey: When you look at the business at the (indiscernible) or board level, historically there been in the either industry or levels within executive search that have (quarries) and the coal mine for significant changes in demand either on the upswing or the downswing?

Gary Burnison – CEO: Usually financial services in my professional career and that including in this business, financial services has generally been the first one in a recession and the first one out. We did see that in the great recession for sure. This has been substantially different over the last several months, it’s an invisible recovery here. We haven’t seen that life sciences and healthcare has continued to be strong for us as well as industrial, but at the (indiscernible) and the coal mine, historically it’s always been financial services.