Gary D. Burnison - Chief Executive Officer, President, Treasurer and Executive Director Robert P.

Rozek - Chief Financial Officer, Principal Accounting Officer and Executive Vice President Gregg Kvochak

Kevin D. McVeigh - Macquarie Research Tobey Sommer - SunTrust Robinson Humphrey, Inc., Research Division Timothy McHugh - William Blair & Company L.L.C., Research Division Mark S.

Marcon - Robert W. Baird & Co.

Incorporated, Research Division

Okay. Well, hello, everybody, and thank you for joining us, and a happy new year.

First, start out with some overall comments. I'm very, very pleased with our momentum, our operating results for the quarter, as well as the strategic progress we've made on integrating our acquisitions.

Fee revenue in the quarter grew. It was about $228 million, which is up 23% year-over-year.

That's up 8% on an organic basis, measured at constant currency, and that's with growth in all of our major operating segments. So today, it's a company that is at an annualized first quarter run rate of about $920 million, with about $128 million of EBITDA.

As we talked about last quarter, we anticipated continued integration activities. And so in the quarter, we did complete those activities.

Our adjusted EBITDA margin was 14%, and that's up substantially from the prior year. We'd like to see that be 15% to 18%, as an organization, that's what we're shooting for.

Our adjusted EPS was $0.33, and that's up $0.11 from the prior year. And our balance sheet continues to be very strong.

I think we've effectively balanced growth and investment. And particularly, as efficiencies and growth come from our recent acquisitions, and with our leadership team around the world effectively driving our strategy, we've improved profitability but we've also increased revenue, not only within our flagship heritage Search business, but also our broader talent management offerings year-over-year, with strong margin expansion and earnings per share growth in the quarter, on an adjusted basis.

And so as a result, we're making this company more relevant. We're making our brand more elastic with, in the quarter now, 40% of the revenue mix was generated from our broader talent management offerings.

And the interesting thing, I think, too, is that it also represents 40% of our EBITDA today. The assimilation of last fiscal year's acquisitions has proceeded as planned.

The outcome of which is an expanded and richer set of offerings to bring to market in an integrated fashion. And in the context of that integration plan, we're also on pace with a major initiative, kind of bottoms-up, to develop and train our consultants on our broader base of solutions.

And that's going to continue during the course of this fiscal year. But while we've experienced top line growth year-over-year, and over the last few months, we've seen a steady increase in new business in almost all regions across all of our lines of business.

We all know, just looking at the computer, that market volatility, overall, is still very present in the world. And our assumption is that this volatility is going to continue to impact global organizations for quite some time.

But with that also comes opportunity for Korn/Ferry. And as a result of today's uneven environment, clients are increasingly borderless, their knowledge-based, they're asking their workforce to do much more with much less, and yet, irrespective of industry or geography, when you talk to a CEO, talent is the ultimate driver of business success.

And so we're transforming Korn/Ferry, not away from a monoline company, but to a unified talent solutions organization. The world's most relevant talent in leadership organization.

A Korn/Ferry that helps boards and CEOs navigate this complex environment by more effectively linking their business and talent strategies. So in the quarter ahead, we're going to focus on 5 key elements of our strategy.

First and foremost, driving an integrated, solutions-based, go-to-market strategy, leveraging our IP. Secondly, continuing to extend and elevate our brand.

I'm enormously proud of how we have elevated and differentiated our search offering, as evidenced by the more key engagements we've secured and our average fee per assignment. Number three, we're going to build, develop and harvest the intellectual property from the Korn/Ferry Institute to feed both our products business, as well as our services businesses.

Number four, we're going to advance Korn/Ferry as the premier career destination, developing and training our consultants on our broader base of solutions and furthering our meritocracy, creating the Korn/Ferry that has a lifetime of career opportunities. And finally, continuing to execute a pragmatic approach to M&A that accelerates our reach and further extends our footprint and offerings.

So with that, I'm going to turn it over to our Chief Financial Officer, Bob Rozek.

Thanks, Gary, and good afternoon, everyone. You could feel the pride in Gary's comments in terms of our quarter.

We're all very proud of what we've done these past 3 months and I'm pleased to announce another quarter of strong results. The privacy [ph] made in the first quarter of fiscal '14 is in line with our previously discussed expectations, and is another important step in the process of accomplishing our strategic vision of creating a leading, most innovative, profitable firm in the evolving talent management industry.

As the worldwide labor market gradually recovers, market demand for our firm's industry-leading talent management solutions continues to improve. As Gary indicated, in the first quarter of fiscal '14, our consolidated fee revenue grew to $228.4 million, with year-over-year growth in all of our major operating segments.

Measured on a constant currency basis, fee revenue grew $2.9 million or 1.3% sequentially, and was up $43.5 million or 23.3%, compared to the first quarter of fiscal '13. Additionally, on an organic basis, excluding the impact of our recent acquisitions, both Global Novations and PDI, consolidated fee revenue in the first quarter grew $14.9 million or 8%, on a constant currency basis, year-over-year.

In the first quarter of fiscal '14, 40% of our consolidated fee revenue was generated in services outside of our core Executive Search offering. And our overall growth continue to outpace many of our major industry competitors.

Executive Search new business awards in the first quarter continued on an upward trend and we did start to see some narrowing in the volatility on a month-to-month basis. Confirmations were sequentially up in both May and June and slightly seasonally weaker in July, with new business in the first quarter up 16% compared to the first quarter of fiscal '13, and 5.6% compared to the fourth quarter.

In LTC, our new business awards really gained momentum through the quarter, with June confirmations 13% higher than May, and July confirmations 15% better than June. And in Futurestep, our backlog remains steady in the quarter, while our pipeline for potential new RPO and project assignments improved considerably, reflecting some of the investments we made in the sales force there.

We're very pleased with the firm's profitability, which improved in the first quarter, as we began to realize the benefits of our ongoing integration initiatives. Excluding all restructuring, integration and separation charges in the current prior periods, adjusted EBITDA improved, both sequentially and year-over-year, growing $4.1 million or 14.7% sequentially, and 11.5 or 57% year-over-year, reaching $31.9 million in the quarter.

Adjusted EBITDA margin was 14% in the first quarter, compared to 12.2% in the fourth quarter of fiscal '13, and 10.9% in the first quarter. Sequentially, profitability improved in all of our major operating segments in the first quarter, with the exception of Futurestep, where investments in the additional global sales website referred to earlier and ramp-up associated with new business activity in Germany and India tempered first quarter margins.

On a GAAP basis, including all restructuring, integration and separation charges, fiscal '14 first quarter operating earnings were $16.7 million with a 7.3% margin, compared to $15.4 million and a 6.8% margin in the fourth quarter of fiscal '13, and $17 million and a 9.1% margin in the first quarter of fiscal '13. As discussed on our last earnings call, in the first quarter, we continue to take actions to integrate our recent acquisitions and rationalize the firm's consolidated infrastructure.

In the first quarter, we eliminated approximately 60 positions and really concluded our office co-location with Atlanta, Dallas and Paris offices. The total cost of these actions in the first quarter was approximately $3.7 million, and these actions are expected to result in annual savings of approximately $5 million, a portion of which was recognized in the first quarter.

Additionally, as we discussed in our last call, for the rest of fiscal '14, we're making investments to drive common and enabling technology systems. And once these systems are fully implemented and operational, we expect the remaining cost synergies to be realized from our FY '13 acquisitions.

Our financial position remains strong in the quarter. Our total cash and marketable securities were $280 million, down $86 million compared to the fourth quarter of fiscal '13, and down $53 million compared to the first quarter of fiscal '13.

Excluding cash and marketable securities reserved for deferred comp arrangements and for accrued bonuses, the current investable cash balance is approximately $132 million, down about $25 million versus the fourth quarter. And that's primarily due to the funding of first quarter long-term incentive awards and the payment of the contingent purchase price for the PDI acquisition.

After considering our working capital needs, our net investable cash is about $32 million. And finally, excluding all restructuring, integration and separation changes -- charges in the current and prior quarters, our first quarter adjusted diluted earnings per share were $0.33, an improvement of $0.01 sequentially and $0.11 year-over-year.

On a GAAP basis, including the impact to net income of those items, fiscal '14 first quarter diluted earnings per share were $0.24, compared to $0.25 in the fourth quarter of fiscal '13 and $0.22 in the first quarter of fiscal '13. And with that, I'll turn it over to Gregg to provide a little more detail on our operating segments.

Okay. We’ll start with our Executive Recruitment segment.

In a slowly improving global labor market, new business confirmations in our Executive Recruitment services showed signs of growth in the first quarter. Consolidated Executive Recruitment fee revenue in the first quarter was $136.7 million, flat sequentially and up $9.2 million or 7.2% year-over-year.

Measured at constant currency, first quarter consolidated Executive Recruitment fee revenue was up 1% sequentially and up 8.2% year-over-year. Regionally, also at constant currency, Europe was up 7.2%; Asia-Pacific was up 13.7%, while North America and South America were down 4.1% and 5.2%, respectively, on a sequential basis.

Year-over-year, also on a constant currency basis, North America grew 3.1%; Europe grew 15%; Asia-Pacific was up 25.3%, while South America was down 8%. Growth in our Executive Recruitment specialty practice was primarily positive in the first quarter.

On a sequential basis, at actual rates, the financial services practice grew 5%, the industrial practice grew 8%, life sciences and healthcare and Consumer Goods were flat, while the technology practice was down 12%. Financial services accounted for approximately 17.5% of all Executive Recruitment fee revenue in the first quarter, up approximately 80 basis points from the fourth quarter of fiscal '13.

Year-over-year, also at actual rates, all of our specialty practices grew in the first quarter, with the exception of the technology practice. Life sciences and healthcare was up 16%, financial services was up 13%, Consumer Goods was up 11% and industrial was up 6%.

Worldwide, the technology practice was down 2% year-over-year in the first quarter. The total number of dedicated executive recruiting consultants worldwide at the end of the first quarter was 416, up 1 year-over-year and up 17 sequentially.

The 17 consultant additions in the first quarter includes 27 promotions and 10 net terminations. Annualized fee revenue production per consultant in the fourth quarter -- in the first quarter was approximately $1.34 million compared to approximately $1.37 million in the fourth quarter of fiscal '13, and $1.25 million in the first quarter of fiscal '13.

The number of new search assignments opened worldwide in the first quarter was 1,216, which was down 1% sequentially and essentially flat year-over-year. Excluding all restructuring charges, consolidated Executive Search adjusted EBITDA improved in the first quarter, measured both sequentially and year-over-year.

Consolidated executive search adjusted EBITDA was $31.8 million in the first quarter, up $5.1 million or 19.1% sequentially. On the same basis, when compared to the first quarter of fiscal '13, consolidated Executive Search adjusted EBITDA in the first quarter of fiscal '14 was up $6.9 million or 27.8%, driven primarily by higher fee revenue across a stable, more efficient cost base.

The worldwide consolidated executive search adjusted EBITDA margin was 23.3% in the first quarter of fiscal '14, compared to 19.6% in both the first and fourth quarter of fiscal '13. Now turning to our Leadership & Talent Consulting segment.

In the first quarter of fiscal '14, worldwide fee revenue for L&TC was $60.1 million, and flat sequentially. Year-over-year, on an organic basis, excluding the fee revenue in the first quarter of fiscal '14 from the recent acquisitions of both Global Novations and PDI Ninth House, L&TC fee revenue grew $3.1 million or 11%.

Regionally, North America accounted for approximately 67% of the total L&TC worldwide fee revenue in the first quarter compared to 71% in the fourth quarter of fiscal '13. Sequentially, on a constant currency basis, fee revenue growth was strongest in Europe and Asia Pacific, which were up 10% and 29%, respectively.

At the end of the first quarter, there were 134 dedicated L&TC consultants compared to 133 in the fourth quarter of fiscal '13 and 48 in the first quarter of fiscal '13. Professional staff utilization was 65% in the first quarter, down 200 basis points sequentially, but up 100 basis points compared to the first quarter of fiscal '13.

Excluding restructuring charges, L&TC's fiscal '14 first quarter adjusted EBITDA was $8.4 million, up $2.1 million or 34% sequentially, and up $3.5 million or 71% year-over-year. Core sequential earnings growth was driven by the realization of cost savings from our ongoing business integration initiatives across a stable fee revenue base.

Adjusted EBITDA margin in the first quarter was 14% compared to 10.4% in the fourth quarter of fiscal '13 and 17.2% in the first quarter of fiscal '13. Finally, turning to Futurestep, which generated a record $31.7 million of fee revenue in the first quarter.

Measured on a constant currency basis, Futurestep's first quarter fee revenue was up $1 million or 3.4% year-over-year and up $1.3 million or 4.1%, sequentially. Measured sequentially on a constant currency basis, Europe was up 3.1%, Asia Pacific was up 20.5%, while North America was down 3.9%.

Approximately, 58% of Futurestep's fee revenue in the first quarter was generated from RPO and project engagements compared to 59% in the fourth quarter of fiscal '13, and 55% in the first quarter of fiscal '13. Excluding restructuring charges, Futurestep's adjusted EBITDA margin was 14.7% in the first quarter compared to 14.7% in the fourth quarter of fiscal '13 and 11.3% in the first quarter of fiscal '13.

I will now turn the call back over to Bob to discuss our outlook for the second quarter of fiscal '14.

Thanks, Gregg. As I said earlier, new orders remained seasonally strong in the first quarter with a little bit -- a little more consistency in the month-to-month trends.

As is usually the case, July new orders were lower than May and June. And August new business also decelerated, but primarily due to seasonality.

But, for example, in our Executive Search, it was still 6% to 7% greater than what we saw last year in the month of August. And looking ahead to the second quarter of fiscal '14, we expect new orders towards the end of the quarter to rebound back to a pace and trajectory similar to that of the beginning of the first quarter.

Assuming worldwide economic conditions, financial markets, foreign exchange rates remain steady, fiscal '14 second quarter fee revenue is likely to range from $225 million to $237 million and diluted earnings per share are likely to range from $0.32 to $0.38. With that, I'll conclude our prepared remarks and we will be glad to take any questions you may have.

I wonder, Gary, it sounds like the LTC business is really contributing a nice percentage of the revenue now. As we think about that sustainable kind of adjusted EBITDA target of 16% to 18%, how are we thinking about kind of the different components and how would they contribute to that in terms of the Search versus LTC?

Well, we're very pleased that the non-Search business has been very persistent [ph], and we -- the Futurestep business is going to have lower margins, for sure, but that's going to be a component of how much RPO activity we have. So as an organization, we are targeting 15% to 18%, and we would expect our LTC business to contribute those kinds of margins.

The Search would be maybe a little bit more and Futurestep would be a little bit less.

Got it. And as you think about LTC at 40%, does that continue to climb here?

Or -- and just on the back of that, it sounds like you're, if I heard it right, pushing kind of out that initiative across all your consultants. Are going to kind of tweak the compensation structure as a result to that at all?

Well, we've continued, over time, to evolve our compensation structure and we will continue to do that. But today, it's all about being relevant and differentiating yourself and fighting for growth.

And so, although, compensation is important, it's not #1. And we have to be more relevant to our clients.

And we think by going to market is one. Bringing a richer, deeper set of offerings, we will, indeed, drive the top line, and our employees and colleagues will be further differentiated.

And just as a point of clarification, the 40%, it not only includes the LTC business, but includes the Futurestep business as well. LTC is about 26% of the top line, Futurestep's 14%.

Got it. And then one last question, if I may, margins overall, it's a real nice expansion, particularly in Europe and Asia Pacific.

Any thoughts on -- is that just kind of in better revenue trends, cost actions or, really, what drove that outperformance?

It's both. We've seen a nice broad-based uptick in activity.

And, secondly, I think that we have really taken the right balance on the seesaw between investment and growth. And we've -- I think, we've actively managed the business over the past few quarters, and I think it's showing.

Gary, over the last year or so, you've deployed some capital, expanded and diversified the business and the cash balance is getting closer to -- back to the prior level. How do you feel, in terms of deploying more capital, to kind of further provide separation between yourselves and the rest of the market versus other alternatives at your disposal?

That's a great observation. Our first priority would always be to invest and grow.

And that we really think that there's a multi-hundred million dollar opportunity for us here, incrementally, from where we are today, and we see ourselves as a couple billion-dollar company. And we also believe we need to continue to arm our organization with deeper, richer offerings.

We think we have a good opportunity on the product side to grow that business through intellectual property and technology. Having said that, we are -- we're not necessarily proud with our return on capital this quarter, which is kind of 7.5%.

We're very, very mindful of that as a leadership team. And so, I'm not going to comment other than I certainly recognize the question, our board recognizes the question, and our priority would be to first deploy it in the business.

But we're very, very mindful of the alternatives with that capital.

And your headcount was up sequentially in the quarter but, I guess, primarily as a result of promotions. What do you think you'd do with it throughout the fiscal year?

And I asked that because the tone of the way demand was characterized in the prepared remarks of various people seemed to demonstrate some improvement. And I just wonder if you're confident enough in that trend to plan on adding to meet that demand?

Well, we -- again, look, Tobey, we continually are looking to promote from within, first and foremost, within the organization. And also to add talent from the outside, like our clients do.

So we're not going to change our modus operandi. And we're going to continue to be aggressive in trying to bring people that not only can drive the top line but they can drive change that can be forward leaning and that can help us continue to move our culture.

Just one quick numerical question and one after that as well. If you gave the spendable cash balance, I didn't catch it, so if I can get that.

And then, Gary, could you talk a little bit more and expand about upon what your plans are and the opportunity to capitalize on the IP resident within the firm and monetize that through perhaps kind of more lucrative channels?

I'll comment on that, and then, Bob, you can...

I'll pick up the...

Yes. As a CEO in just about any company or any industry, any business, there is an incredible fight for growth right now, and at the same time, you're asking more from less people.

So with that as a backdrop and this fight for growth, organizations spend anywhere from $400 to $1,000 per employee on development, and on motivation and stimulation. And so we think that there is an opportunity to license our intellectual property to help that CEO, to help him or her drive that growth, create that excitement, create that motivation.

And so today, we've got what we would characterize as a $50 million, essentially $50 million, products business, either paper-based or software-based, where companies use our intellectual property to engage a workforce, develop a workforce, stimulate a workforce. And so we are thinking up in ways in which we can take that intellectual property and capture some of that spend of, say, $500 or $1,000 per seat around development.

So one of the things, as an example, is around this concept of learning agility, which we think, in the environment today, is critical, this kind of borderless growth. And so, we are developing product that can be licensed for companies to use with kind of knowledge transfer that doesn't require an army of consultants to really stimulate and motivate a workforce.

And then, Tobey, this is Bob. On the cash, I'll just run through the numbers quickly with you.

So our total cash and marketable securities position at the end of the quarter is $280 million. And when you back out amounts for deferred comp and bonus, that goes down to about $132 million.

And when you adjust that down further for our global working capital needs, that's about -- we're left about $32 million.

I guess, just at a high level in the Executive Search business, can you characterize to us how it feels different than a year ago, when there's kind of downward pressure on you and others in the industry? It clearly seems to have improved, but if there's 1 or 2 factors that you would point to, what would they be?

Well, I think, number one, we're 1 year further out from the great train wreck, so we're now 4 years into a cycle versus 3 years. I think that people are becoming very, very accustomed to the new normal.

So I think that there's a sense of more normalcy for our clients. The second thing is that financial services, as you very well know, Tim, was very, very challenged.

Going back several years, it historically represented 22% of this company. Today, on a consolidated basis, it's 15%.

So it's still off where it was. And so, you're seeing again more normalcy there, more people accustomed to the re-regulation, a shift from investment banking to commercial banking, asset management, wealth management, we're adjusting to that trend.

And the third area is life sciences and healthcare, and that continues, even from a year ago, to be a very, very buoyant market across -- whether it's pharma or biotech. So those are the headlines.

Our average search fee over a year is probably up just slightly, I guess. It just held its own and it's up a little bit.

That's probably what I would characterize as the big-ticket item.

Yes. And I would just interject, Tim, a little bit.

If you go back, because we looked at our new business activity over the past 12 months and 0it's like January 1 hit and there was a step change in the level of new business activity. We saw almost an average of 10% consistent growth from the second half of that 12-month period versus the first half.

The numbers in Europe and Asia seem a lot better, just, at least, on a year-over-year basis. Does that environment feel sustainably different?

And is that macro related or more individual or company-specific?

Well, it'd probably be unfair to say just company specific. Yes, it’s both, but, when you -- if you were to talk to 2 of our great leaders in both those businesses and you ask them the difference, there'd be 3 words.

And that would be, our-integrated-offering. So our differentiated platform, I think, is making a huge difference in Europe and Asia.

But look, it's clearly both. It's a more stable environment, but it's also the offerings that we're putting together here.

And then on the leadership and talent side, the organic growth looked good but the revenue run rate that, coming out of PDI and Global, remained a little lower, I guess, than the historical. How do you -- you talked about organic -- or kind of, I guess, new business trends improving, how do you feel about the underlying organic growth potential as, in a couple of quarters, they'll get dropped then to that calculation, at least?

Yes, well, we -- there was organic growth year-over-year in that business. I think that 248 days into this, we have done an awful lot, in terms of bringing together, essentially, 2 equal-sized organizations.

We've co-located or relocated a large percentage of our workforce. We've done some things around technology, intellectual property and culture.

And we had a very planned approach that we would focus on those areas, as well as profitability. So, for example, for the PDI investment, when we made the acquisition, we said that we would pick up somewhere between $86 million and $96 million of revenue, it was running at a 8% margin.

We want to add 10 percentage points to that. And I think we've essentially delivered on that.

But our expectation, and it may not be in this next quarter, or the quarter after, but our expectation is that the growth rate on this business better be well north of 10%. That's our own expectation.

So it's -- I think we're very pleased with where we are, but we're certainly not where we want to be.

Yes. And Tim, I would just add a couple of thoughts.

And that one is, as you look at those businesses, it's really -- it's almost impossible today to continue to pick them apart and focus solely on PDI or Global Novations as we continue with the integration of our products and offerings and so on. Coming out with a more common uniform set of assessments and competencies and so on.

I think, second, if you look at the new business, in both of PDI and Global Novations, you really start to see us exiting the quarter with some real momentum. And just to give you one point of fact.

In Global Novations, for example, if you go back and look at where they were in the fourth quarter of last year, and there was their backlog relative to where they are today, it's up 2x. So we're starting to see some of the top line momentum as we exit the quarter.

And is there's still a deferred revenue impact weighing on in terms of write-off, of deferred revenue, and I guess, weighing on?

Yes, there is. And that's more relative to PDI than to Global Novations.

Global Novations has a small amount of deferred license fees when we bought them, but PDI was up in the -- somewhere between $4 million and $5 million of deferred fees that we just -- we're not getting the benefit of, as we go into this year so...

That was the aggregate, right? Or was that impact just in Q1?

No, that was the aggregate. So that we'll lap that January 1 of next year.

Okay. And then, just one quick numbers question.

The tax rate, it was a little higher than I expected. I guess, kind of at least what are you assuming for 2Q kind of going forward?

Yes. We've got this phenomenon with way that GAAP makes you do your interim tax rates that you'll end up, our rate is not going to change on a full year basis.

But what ends up happening, because of the mechanics of the interim provision calculation, you end up with a little bit higher Q1 and Q2 and that reverses Q3, Q4. So I would say Q2, I'd hold pretty consistent with where we are now and then we'll see that come down Q3, before -- if you go back and look at FY '14, or I'm sorry, FY '13, you'll see probably a very similar pattern.

So it's a 35% for the full year still?

Yes, I think 35% for the full year is probably a good number.

Can you talk a little bit more about LTC with regards to -- what is -- what you've learned over these 200 days, that those organizations have been put in place? What's a little bit -- what are the areas that are -- where you're finding the highest level of success?

And as we think about that growth rate on an organic basis being north of 10%, how should we think about the incremental margins? In other words, what's the pace of getting to the targeted operating margin for that particular business?

Well, I think that, in terms of what we've learned, you don't know what you don't know. I think that, in so many of these acquisitions, what you find is you focus on strategy and numbers, but the ultimate trump card is people and culture.

So I think that what we have learned is that the -- one of our reads, relative to the culture of, for example, Global Novations, or PDI, was that they were meritocracies, and it's turned out that we were right. But the amount of -- when you do an acquisition, the amount of uncertainty and questions are certainly pretty high.

But we've also learned that when we really combine the firm as one, and not Search or Futurestep or LTC, but rather, when we go as one, and what, for example, Bernard is leading in Europe, we're having enormous success. So I think that is the big learning.

Is that the brand has incredible permission. There is a real pull factor there and that, as an organization, we must go to market as one.

So that's one learning that we have to continue to push forward.

And then, as we think about the -- hitting the targeted level in terms of the margins, how should we think about that in terms of that?

I would think, Mark, that we'll, over the next couple of quarters, we should be relatively consistent with where we are now. As we've said, we've got some investing to do in our technology platform before we can fully realize all of the benefits.

And as we've looked at the cut over time frame on that technology, given our Sarbanes-Oxley requirements and so on, that will probably be a May 1 cut over. So we would expect to hit our full stride probably starting next year.

But like I said before, we're pretty proud of the progress we've made so far this year.

Yes, I mean, it's been nicely consistent since the first quarter where it was fully integrated. And you mentioned the utilization rate, where would you expect that to go to?

Better be higher.

I sense that.

I think, our target for them is about 70%. So it just is...

In the near term.

Yes, in the very near term. It's the summer time now, with vacations on our side, our clients' side and so on.

And so, we saw a little bit of a dip there from -- we were running at about 67%, but we'd like to see that at closer to 70% very near term.

And can you talk a little bit about both EMEA and Asia Pac, just in terms of the increase in the margins. You did mention that there was some reduction in cost.

And obviously, the revenue ended up increasing. But was there anything else that contributed to the significant jumps in the margins on both sides?

Mark, again, if you would ask our leaders of those businesses, they both, independently, consistently, would tell you that it's the integrated offering and the value proposition. So I think that, that is certainly part of it.

We've seen, we think, in Europe, I'm incredibly proud of the organization there. We saw, despite all the questions about Europe, just sequentially, we saw improvement in France, Germany, Switzerland, our business is incredible, and in the U.K.

And in Asia, Australia was very, very solid. China was solid and Singapore was very good in the quarter.

And so, some of that has been helped by a more normal financial services environment, for sure.

So it sounds like the margins, in terms of where they currently are within your international search operations, should be sustainable?

At these revenue levels, we would think so.

Great. And then can you talk -- last question and then I'll jump off, can you talk a little bit about -- we always talked about the value add that comes from the core executive search.

And obviously, the finding part has changed, as you've described. Do you think plans have kind of -- and I'm talking about in North America, have kind of normalized in terms of, here's what -- where we feel like we need somebody from the outside and here's where we think we can do as good a job inside.

Do you...

I think so. I think that there was also, coming out of -- early into this recovery, a heavy focus on outsourcing, outsourcing all sorts of functions.

I think that, that has normalized. And right now, there's just an incredible, incredible fight for growth for -- with our clients.

My question's been answered.

Okay. Well, I want to thank our shareholders and we are very, very proud of where we are today, but we're not where we want to be.

And just like our clients, we got to be limber and agile and driven to act always, all the time. And thank you for your time this afternoon and we look forward to speaking with you again.

Thank you.