Korn Ferry (KFY) 2011 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Korn/Ferry International conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded.

Before I turn the call over to your host, Mr.

Gary Burnison, let me first read a cautionary statement to investors.

Certain statements made in the presentation today, such as those relating to future performance, plans, and goals, will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements.

Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties which are beyond the Company's control.

Additional information concerning such risks and uncertainties can be found in the release relating to this presentation in the Company's annual report for fiscal 2010 and in the other periodic reports filed by the Company with the SEC.

Also, some of the comments today will reference non-GAAP financial measures, such as adjusted operating earnings.

Investors should review our reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure contained in the release relating to this presentation, which is posted on the Company's website at www.kornferry.com.

With that, I'll turn the call over to Mr.

Burnison.

Please go ahead, Mr.

Burnison.

Well, thank you, Cathy, and good afternoon everyone.

And, thank you joining us to talk about our fourth-quarter earnings and our fiscal year 2011 results.

I'd first say, if I had to pick one word that would describe how I feel about this last year it would be pride.

I am very proud of our organization for what we have accomplished this past year and what we look to accomplish in the future.

I am pleased to report that this was our eighth consecutive quarter of growth.

It was -- the growth was in about every market sector and service line.

We hit $197 million in revenue, that was up 6% sequentially, and that was 17%, year-over-year.

For the year, for the fiscal year 2011, we drove 30% growth, hitting almost $745 million of revenue.

And, it was driven by the strength of our differentiated strategy, the loyalty of our clients, and the passion of our employees.

As a result of all of these things, we achieved an operating margin of almost 12% for the year.

In the face of a still tepid economic environment, we have absolutely fast-forwarded our firm's transformation, helping clients achieve extraordinary results through their people.

More than a quarter of our revenue came from our Leadership and Futurestep solutions.

Both are operating profitably at about $100 million of revenue each.

We look forward to continuing this momentum in the year ahead by accelerating our strategic initiatives, capitalizing on our strong balance sheet, and most importantly, cultivating the incredible talent that we have in this firm, all the while, balancing investment and profitability.

We are systematically driving a more integrated client relationship approach, while accelerating our evolution to a consultative, solutions-based organization.

That's backed by the fact that if you look at our top 50 clients, 86% of them are using at least two of our service lines.

At the same time, we are elevating and extending our brand, we are increasing the mind share and relationships at the highest levels in organizations, which is driving a significant increase in our CEO and Board-related consulting assignments.

We are going to continue to pursue our long-term growth strategy by executing a pragmatic approach to M&A that accelerates our transformation as the leading global provider of human capital services.

And finally, we are advancing this organization as the premier career destination in the industry.

We have been a firm that has once again performed at a high level.

However, when you look around, it's still quite clear that the global business environment remains choppy.

And, while we are proud of our performance, it is important to remember that performance is not just absolute, it is also relative.

When I look back over this last year, I am not only proud of our absolute performance, but equally proud of the organization for our relative performance, never accepting the status quo, staying close to our clients, breaking new ground, and outpacing the industry by a substantial amount, once again.

However, as an organization, we don't look behind.

We are a Company that looks forward.

We've got a heritage of that, proudly putting a stake in the ground on the next challenge and identifying and seizing our next opportunities.

With that, I would like to turn the call over to our Chief Financial Officer, Mike DiGregorio.

Mike?

Thanks, Gary, and good afternoon, everyone.

Despite the uneven pace of the worldwide economic recovery, demand for our world-class, executive recruiting, leadership and talent consulting, and recruitment process outsourcing services continues to strengthen.

As Gary said, the fourth quarter of fiscal 2011 marks our eighth consecutive quarter of sequential growth and was seasonally strong, due in part to strong fiscal year-end up-tick activity.

In the fourth quarter, fee revenue grew by $10.8 million and nearly 6% sequentially, and was up $29 million or 17%, year-over-year, reaching $197.3 million.

For the total year, fee revenue of $744 million was up 30% versus the prior year.

On a constant currency basis, the firm's fourth quarter fee revenue grew 3.3% sequentially, and 13% year-over-year, and for all of fiscal 2011, was up 29%.

New business trends also improved in the fourth quarter with a number of newly opened, combined executive search and leadership talent consulting assignments, growing 11% both sequentially and year-over-year to 2,131.

For all of 2011, the number of newly opened assignments grew by 21% to 7,905.

Most importantly, our earnings and profitability continue to improve with revenue.

Fiscal 2011 fourth quarter operating income was very strong, reaching $26.2 million, with an operating margin of 13.3%.

This is an operating income improvement of $5.7 million or 28% sequentially, and $12.5 million or 92% year-over-year, with a sequential operating margin improvement of 130 basis points, and a year-over-year operating margin improvement of 520 basis points.

Included in the fourth quarter operating income, is a $2.2 million credit, which reduced G&A, primarily associated with a fair value adjustment to a contingent consideration arrangement related to a prior-year acquisition.

Excluding all the restructuring charges and adjustments in both fiscal 2010 and 2011, fiscal 2011 total year operating income improved nearly 5 times, year-over-year, reaching and near record $87.9 million, with an 11.8% operating margin.

All of our operating segments and regions were profitable in fiscal 2011.

Our fourth quarter ending cash and marketable securities balance improved by $65 million sequentially to $369 million.

Excluding cash and marketable securities reserved for deferred compensation arrangements and for accrued bonuses, the current investable cash balance is approximately $171 million, which is up $39 million versus Q3.

Finally, Q4 diluted earnings per share increased by $0.13, or 43% sequentially, and by $0.24 or 126% year-over-year, reaching $0.43 per share.

Included in the fourth quarter net income and EPS are $0.04 of nonrecurring tax benefits associated with the reversal of a state tax reserve originally established in fiscal 2005, in which the statute of limitations expired during the fourth quarter.

Net earnings were also positively impacted in the current quarter by market-driven returns in our ECAP and COLI portfolios, as well as in fiscal 2011 quarters two and three, and in addition, in fiscal 2010, Q4 as well.

Excluding all the restructuring charge adjustments and nonrecurring tax benefits in both years, fiscal 2011 total year earnings per share were $1.25 versus $0.35 per share in fiscal 2010.

At this time, I will turn the call over to our Senior Vice President of Finance, Investor Relations, Gregg Kvochak, to review our operating segments in a little more detail.

Gregg?

Thanks, Mike.

Starting with our executive recruiting segment, consolidated fourth-quarter executive recruiting fee revenue was $172 million, up $8.8 million, or 5.4% sequentially, and up $21 million or 14% year-over-year.

Fiscal 2011 fourth-quarter growth was broad-based with all of our operating regions up both sequentially and year-over-year.

On a constant currency basis, executive search fiscal 2011, fourth quarter fee revenue was up $6 million, or 4% sequentially, and up $16.7 million, or 11%, year-over-year, driven primarily by an 11% sequential and year-over-year increase in the number of newly-opened combined executive search and leadership talent consulting assignments, as previously noted.

Sequentially, fee revenue growth in the financial services, consumer goods, and industrial specialty practices were strongest, at 14%, 12%, and 11% respectively.

For all of fiscal 2011, executive search fee revenue grew $148 million, or 29%, on a constant currency basis.

In the North American region, fourth-quarter fee revenue improved approximately $2 million or 2% sequentially, and $11.9 million, or 14%, year-over-year, reaching a record $97 million.

Sequential growth in the consumer goods practice, up 11%, the financial services practice, up 3%, and the industrial practice, up 6%, was offset primarily by weakness in the technology practice.

Newly confirmed assignments, North America, were up 6% in the fourth quarter of fiscal 2011 versus the third quarter of fiscal 2011.

In Europe, fee revenue trends continue to gradually improve.

At actual rates, EMEA's fee revenue grew $2 million, or 5% sequentially in the fourth quarter, reaching $42 million.

On a constant currency basis, EMEA's fourth-quarter fee revenue was up slightly versus the third quarter, and was up $3.8 million or 11%, year-over-year.

10 of 17 countries grew is sequentially in the fourth quarter, led by the UK and Germany, which were up 20% and 13% respectively.

On a specialty practice basis, the industrial, consumer goods, and financial services practices improved the most sequentially, and were up approximately 16%, 9%, and 5% respectively.

For all of fiscal 2011, EMEA's fee revenue grew $23 million or 17% on a constant currency basis.

After a seasonally weak third quarter, fee revenue in Asia Pacific rebounded in the fourth quarter, growing to $24.7 million.

On a constant currency basis, fiscal 2011 fourth quarter fee revenue was up $3.6 million, or 17% sequentially, and was up $1.5 million, or 7% year-over-year.

Sequential growth was achieved in all major specialty practices, led by financial services, which was up 97%.

For all of fiscal 2011, Asia Pacific fee revenue was up $22 million, or 34%, a constant currency basis.

Fourth quarter fee revenue was also strong in South America.

Measured on a constant currency basis, South America's fourth quarter fee revenue was up approximately $600,000, or 7% sequentially, and up $600,000 or 2% year-over-year.

Six of seven countries grew sequentially in the fourth quarter, led by Brazil, which was up 6%.

For all of fiscal 2011, South America's fee revenue was up $7.5 million or 31%, compared to fiscal 2010.

The number of executive recruiting consultants at the end of the fourth quarter was 471, down 3 sequentially and down 2 year-over-year.

Annualized fee revenue production per consultant was up 7% sequentially in the fourth quarter to approximately $1.38 million.

Consolidated executive search operating earnings improved in line with fee revenue in the fourth quarter and was up approximately $1.7 million, or 6% sequentially, to $30.7 million.

Compared to the fourth quarter fiscal 2010, consolidated executive search operating earnings was up $7.6 million, or 33%.

The consolidated executive search operating margin was 17.9% in the fourth quarter, compared to 15.4% in the fourth quarter of fiscal 2010, and 17.8% in the third quarter of fiscal 2011.

Excluding all restructuring charges and adjustments, fiscal 2011 total year consolidated executive search operating earnings were $113.6 million, with a 17.4% operating margin.

This is a year-over-year improvement of $52 million, or 84%, with a 520-basis point improvement in margin.

Now, turning to Futurestep, which grew for the eighth consecutive quarter.

In the fourth quarter, consolidated Futurestep fee revenue grew 40% year-over-year, and 8% sequentially, reaching $25.3 million.

Measured on a constant currency basis, fourth quarter fee revenue was up $5.2 million or 29% year-over-year, and up $300,000, or 1% sequentially.

Geographically, sequential growth was strongest in Europe, where constant currency growth was 17%.

For all of fiscal 2011, Futurestep's fee revenue grew $20 million or 30% on a constant currency basis.

Futurestep's profitability also improved in the fourth quarter.

Sequential Futurestep -- sequentially Futurestep's operating earnings grew approximately $240,000, with a 60-basis point margin improvement, to 6%.

Excluding all restructuring-related charges in the fourth quarter of fiscal 2010, Futurestep's fiscal 2011 fourth-quarter operating earnings improved $2.5 million, year-over-year, from a loss of $1 million to a profit of $1.5 million.

Excluding all restructuring-related adjustments in both years, Futurestep's full-year fiscal 2011 operating earnings improved $6.3 million, from a loss of $1.5 million in fiscal 2010, to a profit of $4.9 million in fiscal 2011.

I'll now turn the call back over to Mike, to discuss our outlook for the first quarter fiscal 2012.

Thanks, Gregg.

Monthly new business awards were seasonally strong in the fourth quarter, as we just told you, and benefited from the usual, strong year-end up-tick activity.

So far, early in the first quarter fiscal 2012, consolidated new business awards have trended at a pace in line with the fourth quarter.

May confirmations were down slightly compared to April in North America and in Asia Pacific, but up in EMEA.

Assuming relatively stable economic conditions for the remainder of the quarter, fiscal 2012 first quarter fee revenue will likely range from $190 million to $205 million, and earnings-per-share will likely range from $0.30 per share to $0.36.

This guidance also assumes that foreign exchange rates remain at or near current spot rates and that the financial markets remain relatively stable compared to Q4.

With that, we conclude our prepared remarks, and at this time, we would be glad to answer any questions you might have.

(Operator Instructions).

Our first question comes from Tobey Sommer with SunTrust Robinson Humphrey.

Please go ahead.

Thank you.

I had a question about a few line items in the P&L going forward.

In terms of gross margins, let's say, do you think you can get them from the 35%-ish level where they are now, in terms of percentage, back up to the 40%?

And then I was wondering if you could comment on G&A expense, on a go-forward basis.

You've done, I think, a pretty impressive job of holding it relatively stable.

Is there anything coming up, either entering some new countries or any kind of hiring that you need to do to continue to support revenue growth?

Thanks.

Well, thank you, thank you, Tobey.

It's -- we do think there is room for margin expansion.

And if you look at the quarter, the comp ratio was 67.7%, a little bit under 68%.

G&A was 17%.

That's going to vacillate from quarter to quarter, but overall, we believe that there is expansion.

We hit a 12% margin.

We think we've got upside beyond that.

In terms of expansion, we are in most countries that we want to be in.

We've reconfigured our Futurestep business, gone to the concept of shared service centers.

We've got six of them or so throughout the world.

So, I wouldn't look at G&A from that perspective.

But, overall, think there is room for margin expansion.

If I could ask a follow-up about fee growth and hiring?

Over the course of the last couple of years, you've made an effort to improve the quality of the consultant base, and that's driven some fee growth, but I was wondering what your expectation might be, leaving that aside and just looking at cash compensation at the positions that you fill.

Is that trending up?

Do you think that provides a tail wind for you?

And then, head count for this year coming up, do you expect it to start to grow, or are you still in a mode of harvesting productivity gains?

Thanks.

We do think there is tail wind on the average fee, assuming a reasonably stable economic environment.

And for this quarter, when you combine our search business with our leadership business, the average fee was around $77,000 or so.

If you take a leadership, it's obviously considerably higher.

But our all-time high, at least in the last decade since I've been here, I want to say, Gregg, is around $90,000, apples to apples.

So, we don't see why we shouldn't be back towards those levels.

In terms of hiring, we've never really guided out more than a quarter.

It's the lifeblood of our firm.

We're always out looking for talent, but we are also promoting talent from within.

Thanks.

Next question is from Mark Marcon with Robert W.

Baird.

Please go ahead.

Hi, good afternoon, and congratulations on the quarter and the year.

Very strong performance.

And also, Gary, congratulations on the book.

Nice accomplishment.

Thank you, Mark.

That means a lot, thank you.

I was wondering if you talk a little bit, just following on Tobey's question, just with regards to the productivity gains?

You've obviously done a great job as a management team in terms of upscaling the quality of the consultants.

You've had a number of people that have joined you from other firms that seem like they are moving up the overall game.

How much higher can the fees per consultant get on a per year basis, or revenue per consultant?

How -- where you think that level could get to at this point?

Well, one of our -- one of the strategies is to move up the average fee, over time, assuming a stable environment.

And we were, at once, say $90,000.

Again, with our leadership business, because the fees -- the average fee per search is going to be substantially higher than that.

So, I don't see -- there hasn't been any structural change, so why shouldn't we be back at that level?

So, this quarter we hit $1.35 million or so, annualized revenue per consultant.

Why couldn't there be 20%, 30% upside on top of that?

We just -- looking out, that's the quality of the people that we have; it's the quality of strategy, and that's where we are competing, so there's no reason why that couldn't continue to move out, again assuming a stable environment.

Okay.

You've mentioned stable environment a number of times.

You're always quite cognizant of the environment.

How are you thinking about things?

What are some of your top consultants saying in terms of what they are hearing from their clients and the approach to the current environment?

Well, there continues to be a focus in the boardroom around strategy risk and succession planning.

So those are clearly playing out in our business.

There continues to be this movement from west to east and north to south, developed -- emerging to developed, and we see our clients doing that.

And, that is our strategy as well, is to follow our clients.

The comments that I say around stable is just because not necessarily what we are picking up from our clients, but as you look at other macro indicators.

And it is hard to tell if it's late fall or early spring given all the questions that are out there in the UK market in the US market principally.

But, as far as we can see, the environment today is stable.

So, you're not hearing any signs of a pullback by your clients at this point?

Or any early signs of that?

Broad-based, no.

Financial services has some pressure that you probably know.

Sure.

And we're seeing some downsizing in some sectors of financial services in some geographies.

But that's really the only thing we've seen, Mark, that would be on the negative side from clients.

Great.

And then, can you talk a little bit about -- one of the successes that you've had this year is LTC, and where could those margins get to over the next couple of years?

And what's a realistic growth path for that business at this point?

Well, we think it's, right now, it's about $100 million business.

It was $6 million about seven years ago.

We believe that that's a multi $100-million opportunity for us.

I cannot pinpoint the exact time, but there is a lot of pull from clients.

And I just look at our own business.

Take a look at our top 50 clients and that 86% of them are using at least two of our solutions, two out of our three areas of solutions.

That gives me great encouragement.

The margins, that is all a question of how heavy we are going to invest.

And so there is the straight up, this seesaw, between profitability and growth, and we try to balance that.

So right now, if you look at that leadership area, it's going to be low single-digit.

But there is no reason, over time, again, why that shouldn't be a double-digit consulting business.

Now, will it have the margins of search?

That's a question mark.

To the extent we drive more product in there, yes, that will increase the leverage and the scale.

But just broadly speaking at it, I would look at it a multi $100-million opportunity.

It's working; there is success.

It's a low single-digit margin area today, and we think that should be double-digit.

I'm assuming we could continue the growth that we've been seeing just on a percentage basis in terms of, say, the last couple of quarters, over the next year or so?

And then see incremental margin improvement in that area even in the near term?

We hope to.

That's clearly, Mark, our goal.

But again, if the environment were to turn in a different direction, those kind of spending decisions are questioned.

So that's definitely where we are trying to take the business.

Understood.

Thank you very much.

We have a question from Kevin McVeigh with Macquarie.

Please go ahead.

Great, thanks.

Hey, nice job on the quarter, echoing Mark's sentiment.

I'm wondering if you could talk about the guidance a little bit.

Seasonally, heading into the summer months, it seems relatively encouraging, and just where the pockets of strength continue to be and again, even as we enter into the summer months?

Well again, as we've said, we've seen some growth in some of the sectors recently, but as Gary said, it's hard to say right now week to week, month to month, but we still feel the dialogue with clients is still positive, and generally speaking, we are, say, cautiously optimistic that we are still moving forward.

But the environment is challenging right now.

Got it.

Hey, Mike, as we think about -- the cash balance continues to build here, as you think about buy back versus strategic acquisitions, do you have any thoughts on percentage of free cash flow to either and whether you would look to consolidate LTC a little bit more?

Any thoughts, directionally in just the use of cash?

To be clear, we don't have very, say, specific, numeric, absolute targets for one versus the other, I'd say.

As we have talked, we continue to look at all of those opportunities and continue to evaluate them, as always, looking at potential M&A type acquisitions as we speak, as we normally are.

And continue to evaluate those.

The other consideration is clearly to continue to invest in the business.

Our view, definitely our interest is building shareholder value for the long-term here, and so we recognize you have to continue to invest, and even despite some of the challenges of the current environment, our look is to invest in the future.

Super.

Thank you.

We have a question from Tim McHugh with William Blair.

Hi, this is Matt Hill, actually, speaking for Tim McHugh this afternoon.

I had a question about -- in Europe it looks like there was a nice pickup in margin, so I was kind of wondering what was driving that?

And if going forward you think that is going to be sustainable?

And the more specifically on Europe, kind of a weakness you're seeing in some countries, it looks like UK and Germany had a good quarter, but just a little more clarity on the countries?

Yes, well, look, it's clearly a challenging environment; we all know that.

I can tell you one thing, our European team that we have is the best in the business.

And if anybody can do it, our colleagues in Europe will do it.

So I think that the margin expansion, it's following the revenue growth.

Our UK business is the flagship of this Company.

It sequentially improved over the quarter.

Our German business was up as well.

And when you look throughout other countries, it was -- even Spain.

Take a Spain that's been in the news a lot, had a very good quarter, and despite talking about Greece, it's been a stable business for us.

But the climate is tough; we know it's tough.

We made investments into that business a couple of years ago, and we just need to continue to have tail winds.

But I am very proud of the sequential improvement in the UK and in Germany.

Okay.

And then also in financial services, Asia looked really strong, and I was just wondering, is this going to be more dependent on geography how this segment of your business is going to play out, going forward?

Well, I think for the next -- I think for the next few months, yes.

I think that is a good insight.

The last quarter in financial services, was actually fairly low, if you recall.

You may not.

But in Asia in particular in financial services, in our third quarter, it was uncharacteristically low that we talked about.

We indicated we didn't see any kind of trend that was going to continue, and sure enough, the business rebounded in the fourth quarter, our April quarter in financial services, Asia, to what it was in the prior two quarters.

But, I think that is good insight.

It will probably be for the next several months, very dependent.

It will be geographic driven for sure.

Okay.

Thank you.

We have a question from Gary [Christian] with Credit Suisse.

Please go ahead.

Go ahead.

Thank you.

I just wanted to follow up on one of the questions asked earlier about what you're hearing on specific sectors?

Could you maybe address what you are hearing from your industrial clients, not to use May as a barometer for what to expect, but some of the leading indicators seem to be sort of weakening a little bit more than anticipated.

Any color you can share with us on what you are hearing about conditions there?

Well, we are seeing the same things that you're picking up on, and the industrial business is a very, very strong component of our firm.

In fact, it represents, call it 28%, 27% of the Company.

So from an industry perspective, it's the flagship of the firm.

It is very broad, covers a lot of different sectors, but we are still seeing -- we're still seeing good demand in energy, and products, and services.

So there hasn't been anything, any kind of trend that would say hold on here.

May was good for our industrial business.

Okay.

And then with respect to the financial services, you'd referenced some weakness, obviously.

Is that true in Asia, too, or is that more in the developed markets?

Yes, more in the developed markets.

Okay.

All right.

Thank you.

We have a follow-up from Tobey Sommer with SunTrust Robinson Humphrey.

Please go ahead.

Thanks.

I was wondering if you could comment about the technology segment, which I think you said was down a little bit sequentially?

Anything in particular there, either on a geographic or particular subsegment basis?

When you look at the technology business, it was down.

Year-over-year the business performed very, very well.

But sequentially, we were disappointed.

And when you look at that in particular, some of that comes from Europe.

Asia was pretty stable.

Latin America was pretty stable, and North America was down a little bit.

So again, it could be a quarterly blip here.

There's no -- were not getting anything on the dashboard that says it's broader than that.

And hopefully it will be like last quarter where we were talking about financial services in Asia.

Okay.

And just to be clear, in financial services, it was up nicely, sequentially in the quarter, is that right?

And maybe just a little bit weak in May or something?

Because I seemed to have heard that it was strong and weak, maybe if you cold clarify that?

I'm sorry.

Yes, I was really referring to the last quarter.

So, the January -- our third quarter.

The January quarter, financial services was weak sequentially.

So, in the January quarter.

And we talked about the on that earnings call.

This quarter, it actually got back to levels that we would expect of the business.

And that was really driven, in large part by Asia, as was the decline in the third quarter.

So we thought that was a blip.

That's what we talked about, and sure enough, the business came back.

Okay.

And then, I was just wondering if you could repeat the spendable cash number that I think you gave in the beginning of the prepared remarks?

Yes, it's about $171 million.

$171 million.

And then my last question is to Gary.

What are you going to do with all that money?

Well, we are going to be stewards for shareholders like hopefully we've been.

And we are, as Mike said, our first priority is to reinvest in the business, to put it to use, to continue to build and buy solutions around how a CEO not just attracts great people, but how he or she deploys a workforce, develops a workforce, and rewards a workforce.

So that is our overarching goal, to put into use in the business.

And if we can't find suitable ways to do that, which I don't think we will do, we will find ways, but then we would look at, more directly, returning cash to shareholders.

But our priority is really investing in the business.

Thank you very much.

We have a follow-up to Mark Marcon with Robert W.

Baird.

Please go ahead.

Just a follow-up with regards to the priorities.

In terms of the areas, you kind of highlighted the strategic elements, are there any specific subsectors that you are looking at more closely than others in terms of potential acquisitions?

And could you give a little more color in terms of what you might buy at a pragmatic approach to acquisitions?

Well the pragmatic being that over a period of years, I hope we've demonstrated that were systematic.

And we are always a there looking for solutions that we can add to this organization to differentiate ourselves.

And so what we meant by pragmatic is consistency, being systematic about it.

Got it.

In terms of the areas that we are looking, it's really going to largely fall in the areas of how in our leadership in Futurestep solutions, really.

So once you -- if take another land, so forget the attract, deploy, develop, reward kind of strategic categories, practically speaking, Mark, that falls in our Leadership solutions for our Futurestep solutions, and that's probably where those would come from.

And we quite candidly need greater scale, breadth and depth in those solutions.

And then can you talk about, in terms of internal head count additions, where were the key priorities, either by practice or geography?

We've got a very concerted effort underway in Asia, we have priorities in the heart of Europe, and we have some priorities in South America.

Those are geographically, broadly speaking, where we are looking.

And from an industry vertical perspective, we're pretty content with the portfolio and the mix, if you look at it from that perspective.

Great.

How difficult is it to find the talent in Asia, and specifically in China?

We've discussed that many time in the past, and wondering if it's becoming easier or harder at this point?

It's still -- it still is challenging.

And that's been consistent for a number of years.

It certainly hasn't become easier to find that talent.

And when you look at these -- when you look at the, call it the knowledge worker category, the Futurestep kind of area, or if you look at the Leadership area,.

Both of those are very, very fragmented, which makes it even more challenging.

I appreciate that.

Thank you.

It appears there are no further questions, Mr.

Burnison.

Well, thank you.

I'm sorry that we did this call well after 5.00 on the East Coast.

Thank you very much for listening here.

Again, I am very, very proud.

I want to thank our shareholders, our clients, and certainly not least, our employees.

Without question, our transformation has taken hold.

I am confident as we enter a new fiscal year that we are going to continue to build this brand that's synonymous with talent management and ultimately allowing our clients to link their business and people strategies.

So with that, thank you very much for your time.

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