Hudson Global Reports 2012 First Quarter Results, Announces Strategic Restructuring Charge
Hudson Highland Group, Inc.
01.05.2012 13:00
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NEW YORK, 2012-05-01 13:00 CEST (GLOBE NEWSWIRE) --
Hudson Global, Inc. (Nasdaq:HSON), a leading global provider of professional
recruitment and related talent solutions, today announced financial results for
the first quarter ended March 31, 2012.
2012 First Quarter Summary
-- Revenue of $200.6 million, a decrease of 8.2 percent from the first quarter
of 2011, or 8.9 percent in constant currency
-- Gross margin of $73.2 million, or 36.5 percent of revenue, representing a
9.8 percent decrease from the same period last year, or 10.1 percent in
constant currency
-- Adjusted EBITDA* loss of $0.9 million, compared with adjusted EBITDA of
$2.4 million in the first quarter of 2011
-- EBITDA* loss of $2.2 million, compared with EBITDA of $2.5 million in the
first quarter of 2011
-- Net loss of $3.2 million, or $0.10 per basic and diluted share, compared
with net loss of $0.0 million, or $0.00 per basic and diluted share, for
the first quarter of 2011
* EBITDA and adjusted EBITDA are defined in the segment tables at the end of
this release.
'Challenging market conditions persisted throughout the first quarter and drove
our results to the low end of our expectations. After making significant
progress in 2011 towards our long-term goals, we have initiated the next phase
of our strategic transition,' said Manuel Marquez, chairman and chief executive
officer at Hudson. 'We will take action to accelerate investment in our growth
businesses, optimize the Hudson service delivery model, and extract synergies
from our back office and business processes. We believe that by taking these
actions, we will make 2012 a foundational year in our progress towards
achieving our long-term financial and strategic goals.'
Commenting on the company's plans, chief financial officer Mary Jane Raymond
said, 'Our action plan is designed to address some of the more imbedded aspects
of our operating model that have caused our earnings progress to be too slow.
We have taken the initial steps to move to a leaner regional structure and more
consistent global operations. Our 2011 efforts to build greater global
coordination have prepared the organization to undertake this work.'
Strategic Transformation
The company launched its strategic transformation program in 2011 and now moves
to accelerate the changes through the following actions:
-- Redirect resources to, and drive sustainable growth from, high potential
strategic businesses, RPO and eDiscovery, and focus on the growth markets
of the world.
-- Optimize its operations in underperforming sectors and markets to deliver
improved performance. The company will re-engineer the delivery model and
consolidate operations globally.
-- Streamline its back office support areas and business processes, and
establish a shared services operation and global centers of excellence, to
gain significant efficiencies of operation.
The above actions will be supported by a restructuring charge of $8 - $10
million during 2012, including $4 - $6 million in the second quarter.
Annualized cost savings are expected to be twice the charge. In 2012, savings
from the program are expected to offset 50 percent of the charge. First quarter
actions related to the restructuring, primarily severance expenses in Europe,
and other charges, totaled $1.3 million.
Regional Highlights
Americas
In the first quarter, Hudson Americas' gross margin increased 14 percent
compared with the prior year period, driven by 100 percent gross margin growth
in permanent recruitment, primarily from strength in RPO. Temporary contracting
was down 3 percent from prior year as Legal eDiscovery declined due to gaps in
large project workflow. Adjusted EBITDA was $0.3 million for the first quarter,
up slightly from $0.2 million a year ago.
Asia Pacific
During the first quarter, European economic conditions and a slowdown in
financial services continued to impact Asia Pacific as some multi-national
clients delayed hiring decisions. Gross margin was down 12 percent in constant
currency in the first quarter from the prior year period, as a 31 percent
increase in talent management could not offset reductions in permanent
recruitment and temporary contracting. China's gross margin was up 6 percent
while all other countries in the region declined in the quarter. Adjusted
EBITDA declined 36 percent to $2.1 million, or 2.9 percent of revenue from $3.2
million in the first quarter of 2011.
Europe
Gross margin in Europe was down 15 percent in constant currency in the first
quarter compared with the first quarter of 2011, as a slowdown in financial
services demand impacted the U.K. business. In continental Europe, growth in
the Netherlands contracting business and steady results in Belgium were not
enough to offset declines in France. Adjusted EBITDA of $1.4 million, or 1.7
percent of revenue, was down from $4.1 million a year ago.
Liquidity and Capital Resources
The company ended the first quarter of 2012 with $81.0 million in liquidity,
composed of $24.9 million in cash and $56.1 million in availability under its
credit facilities. The company used $7.2 million in cash flow from operations
during the quarter and had no outstanding borrowings at the end of the first
quarter, compared with $3.4 million at the end of the fourth quarter of 2011.
Business Outlook
Given the current economic environment, the slowdown in the financial services
sector, and the actions being taken to reposition the business, the company
expects sequential second quarter 2012 revenue growth to range from down
slightly to up 5 percent. Against prior year, revenue may decline by around 20
percent at prevailing exchange rates. The company expects second quarter 2012
adjusted EBITDA between $0 and $3 million before restructuring charges and
expects the charge in the quarter will range from $4 to $6 million. This
compares with revenue of $247.4 million and EBITDA of $7.7 million in the
second quarter of 2011.
Conference Call/Webcast
Hudson will conduct a conference call today at 10:00 a.m. ET to discuss this
announcement. Individuals wishing to listen can access the webcast on the
investor information section of the company's web site at www.hudson.com.
The archived call will be available on the investor information section of the
company's web site at www.hudson.com.
About Hudson
Hudson is a leading provider of permanent recruitment, contract professionals
and talent management services worldwide. From single placements to total
outsourced solutions, Hudson helps clients achieve greater organizational
performance by assessing, recruiting, developing and engaging the best and
brightest people for their businesses. The company employs more than 2,000
professionals serving clients and candidates in approximately 20 countries.
More information is available at www.hudson.com.
Forward-Looking Statements
This press release contains statements that the company believes to be
'forward-looking statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including statements regarding
the company's future financial condition, results of operations, business
operations and business prospects, are forward-looking statements. Words such
as 'anticipate,' 'estimate,' 'expect,' 'project,' 'intend,' 'plan,' 'predict,'
'believe' and similar words, expressions and variations of these words and
expressions are intended to identify forward-looking statements. All
forward-looking statements are subject to important factors, risks,
uncertainties and assumptions, including industry and economic conditions' that
could cause actual results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and assumptions
include, but are not limited to, global economic fluctuations; risks related to
fluctuations in the company's operating results from quarter to quarter; the
ability of clients to terminate their relationship with the company at any
time; competition in the company's markets; risks associated with the company's
investment strategy; risks related to international operations, including
foreign currency fluctuations; the company's ability to implement cost
reduction initiatives effectively, including the recently announced
restructuring program; the company's dependence on key management personnel;
the company's ability to attract and retain highly skilled professionals; risks
in collecting the company's accounts receivable; the company's history of
negative cash flows and operating losses may continue; restrictions on the
company's operating flexibility due to the terms of its credit facilities; the
company's heavy reliance on information systems and the impact of potentially
losing or failing to develop technology; risks related to our dependence on
uninterrupted service to clients; the company's exposure to employment-related
claims from both clients and employers and limits on related insurance
coverage; volatility of the company's stock price; the impact of government
regulations; and restrictions imposed by blocking arrangements. Additional
information concerning these and other factors is contained in the company's
filings with the Securities and Exchange Commission. These forward-looking
statements speak only as of the date of this document. The company assumes no
obligation, and expressly disclaims any obligation, to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
-----------------------------
2012 2011
-----------------------------
Revenue $ 200,590 $ 218,539
Direct costs 127,382 137,341
-----------------------------
Gross margin 73,208 81,198
-----------------------------
Operating expenses:
Selling, general and administrative expenses 74,465 78,808
Depreciation and amortization 1,505 1,576
Business reorganization and integration expenses 940 351
-----------------------------
Total operating expenses 76,910 80,735
-----------------------------
Operating income (loss) (3,702) 463
Other income (expense):
Interest income (expense), net (161) (206)
Other income (expense), net (4) 487
-----------------------------
Income (loss) before provision for income taxes (3,867) 744
Provision for (benefit from) income taxes (646) 750
-----------------------------
Net income (loss) $ (3,221) $ (6)
=============================
Earnings (loss) per share:
Basic $ (0.10) $ (0.00)
=============================
Diluted $ (0.10) $ (0.00)
=============================
Weighted average shares outstanding:
Basic 31,765 31,325
Diluted 31,765 31,325
--------------------------------------------------------------------------------
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HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
March 31, December
31,
2012 2011
---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,930 $ 37,302
Accounts receivable, less allowance for doubtful accounts 132,567 131,489
of $1,680 and $1,772, respectively
Prepaid and other 13,850 13,132
---------------------
Total current assets 171,347 181,923
Property and equipment, net 18,000 17,838
Deferred tax assets, non-current 10,408 8,628
Other assets 6,022 8,157
---------------------
Total assets $ 205,777 $ 216,546
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,734 $ 12,025
Accrued expenses and other current liabilities 70,698 74,248
Short-term borrowings -- 3,384
Accrued business reorganization expenses 759 858
---------------------
Total current liabilities 83,191 90,515
Other non-current liabilities 10,593 10,867
Income tax payable, non-current 4,869 7,807
---------------------
Total liabilities 98,653 109,189
=====================
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000 shares -- --
authorized; none issued or outstanding
Common stock, $0.001 par value, 100,000 shares authorized; 33 33
issued 33,283 and 32,776 shares, respectively
Additional paid-in capital 471,719 470,786
Accumulated deficit (400,511) (397,290)
Accumulated other comprehensive income--translation 36,045 34,255
adjustments
Treasury stock, 34 and 79 shares, respectively, at cost (162) (427)
---------------------
Total stockholders' equity 107,124 107,357
---------------------
Total liabilities and stockholders' equity $ 205,777 $ 216,546
=====================
--------------------------------------------------------------------------------
-
--------------------------------------------------------------------------------
-
HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - QUARTER TO DATE
(in thousands)
(unaudited)
For The Three Months Ended Hudson Hudson Hudson Corporate Total
March 31, 2012 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 45,170 $ 74,263 $ 81,157 $ -- $ 200,590
customers
====================================================
Gross margin, from external $ 11,831 $ 29,313 $ 32,064 $ -- $ 73,208
customers
====================================================
Adjusted EBITDA (loss) (1) $ 275 $ 2,124 $ 1,415 $ (4,754) $ (940)
Business reorganization $ 20 $ 67 $ 720 $ 133 $ 940
expenses (recovery)
Office integration expense -- 316 -- -- 316
Non-operating expense 746 1,731 1,782 (4,255) 4
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ (491) $ 8 $ (1,087) $ (631) $ (2,201)
Depreciation and 1,505
amortization expenses
Interest expense (income), 161
net
Provision for (benefit (646)
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ (3,221)
==========
For The Three Months Ended Hudson Hudson Hudson Corporate Total
March 31, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 45,812 $ 79,017 $ 93,710 $ -- $ 218,539
customers
====================================================
Gross margin, from external $ 10,357 $ 31,903 $ 38,938 $ -- $ 81,198
customers
====================================================
Adjusted EBITDA (loss) (1) $ 204 $ 3,151 $ 4,136 $ (5,100) 2,390
Business reorganization $ -- $ -- $ 351 $ -- $ 351
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 583 1,137 1,610 (3,816) (486)
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ (379) $ 2,014 $ 2,175 $ (1,284) $ 2,526
Depreciation and 1,576
amortization expenses
Interest expense (income), 206
net
Provision for (benefit 750
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ (6)
==========
For the Three Months Ended Hudson Hudson Hudson Corporate Total
December 31, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 47,802 $ 83,185 $ 91,751 $ -- $ 222,738
customers
====================================================
Gross margin, from external $ 13,738 $ 33,598 $ 37,312 $ -- $ 84,648
customers
====================================================
Adjusted EBITDA (loss) (1) $ 2,445 $ 4,988 $ 2,967 $ (4,131) $ 6,269
Business reorganization $ -- $ -- $ (27) $ -- $ (27)
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 1,204 1,847 1,854 (4,615) 290
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ 1,241 $ 3,141 $ 1,140 $ 484 $ 6,006
Depreciation and 1,501
amortization expenses
Interest expense (income), 234
net
Provision for (benefit 962
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ 3,309
==========
For the Three Months Ended Hudson Hudson Hudson Corporate Total
June 30, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 50,912 $ 96,275 $ 100,191 $ -- $ 247,378
customers
====================================================
Gross margin, from external $ 13,021 $ 40,218 $ 42,228 $ -- $ 95,467
customers
====================================================
Adjusted EBITDA (loss) (1) $ 1,838 $ 6,099 $ 5,521 $ (5,402) $ 8,056
Business reorganization $ -- $ -- $ 396 $ -- $ 396
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 678 2,295 2,390 (5,358) 5
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ 1,160 $ 3,808 $ 2,735 $ (44) $ 7,661
Depreciation and 1,636
amortization expenses
Interest expense (income), 375
net
Provision for (benefit 1,426
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ 4,224
==========
(1) Non-GAAP earnings before interest, income taxes, and depreciation and
amortization ('EBITDA') and non-GAAP earnings before interest, income taxes,
depreciation and amortization, non-operating income, goodwill and other
impairment charges, business reorganization expenses and other expenses
('Adjusted EBITDA') are presented to provide additional information about the
company's operations on a basis consistent with the measures which the company
uses to manage its operations and evaluate its performance. Management also
uses these measurements to evaluate capital needs and working capital
requirements. EBITDA and adjusted EBITDA should not be considered in isolation
or as a substitute for operating income, cash flows from operating activities,
and other income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of the company's
profitability or liquidity. Furthermore, EBITDA and adjusted EBITDA as
presented above may not be comparable with similarly titled measures reported
by other companies.
HUDSON GLOBAL, INC.
Reconciliation for Constant Currency
(in thousands)
(unaudited)
The company operates on a global basis, with the majority of our gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect our results of operations. Constant currency
information compares financial results between periods as if exchange rates had
remained constant period-over-period. The company currently defines the term
'constant currency' to mean that financial data for a previously reported
period are translated into U.S. dollars using the same foreign currency
exchange rates that were used to translate financial data for the current
period.
Changes in revenue, gross margin, selling, general and administrative expenses
('SG&A'), business reorganization expenses and other non-operating income
(expense), operating income (loss) and EBITDA (loss) include the effect of
changes in foreign currency exchange rates. Variance analysis usually describes
period-to-period variances that are calculated using constant currency as a
percentage. The company's management reviews and analyzes business results in
constant currency and believes these results better represent the company's
underlying business trends.
The company believes that these calculations are a useful measure, indicating
the actual change in operations. There are no significant gains or losses on
foreign currency transactions between subsidiaries. Therefore, changes in
foreign currency exchange rates generally impact only reported earnings.
Three Months Ended March 31,
-------------------------------------------
2012 2011
-------------------------------------------
Currency Constant
As As translati currency
reported reported on
-------------------------------------------
Revenue:
Hudson Americas $ 45,170 $ 45,812 $ (7) $ 45,805
Hudson Asia Pacific 74,263 79,017 4,053 83,070
Hudson Europe 81,157 93,710 (2,472) 91,238
-------------------------------------------
Total $ 200,590 $ 218,539 $ 1,574 $ 220,113
-------------------------------------------
Gross margin:
Hudson Americas $ 11,831 $ 10,356 $ (6) $ 10,350
Hudson Asia Pacific 29,313 31,905 1,472 33,377
Hudson Europe 32,064 38,937 (1,208) 37,729
-------------------------------------------
Total $ 73,208 $ 81,198 $ 258 $ 81,456
-------------------------------------------
SG&A and other non-operating income
(expense) (1):
Hudson Americas $ 12,299 $ 10,733 $ (7) $ 10,726
Hudson Asia Pacific 29,233 29,888 1,413 31,301
Hudson Europe 32,438 36,415 (1,144) 35,271
Corporate 499 1,285 -- 1,285
-------------------------------------------
Total $ 74,469 $ 78,321 $ 262 $ 78,583
-------------------------------------------
Business reorganization expenses:
Hudson Americas $ 20 $ -- $ -- $ --
Hudson Asia Pacific 67 -- -- --
Hudson Europe 720 351 (8) 343
Corporate 133 -- -- --
-------------------------------------------
Total $ 940 $ 351 $ (8) $ 343
-------------------------------------------
Operating income (loss):
Hudson Americas $ (64) $ (118) $ -- $ (118)
Hudson Asia Pacific 1,045 2,432 108 2,540
Hudson Europe 333 3,319 (113) 3,206
Corporate (5,016) (5,170) -- (5,170)
-------------------------------------------
Total $ (3,702) $ 463 $ (5) $ 458
-------------------------------------------
EBITDA (loss):
Hudson Americas $ (491) $ (379) $ (1) $ (380)
Hudson Asia Pacific 8 2,014 59 2,073
Hudson Europe (1,087) 2,175 (55) 2,120
Corporate (631) (1,284) -- (1,284)
-------------------------------------------
Total $ (2,201) $ 2,526 $ 3 $ 2,529
-------------------------------------------
(1) SG&A and other non-operating income (expense) is a measure that management
uses to evaluate the segments' expenses, which include the following captions
on the Condensed Consolidated Statements of Operations: Selling, general and
administrative expenses and other income (expense), net. Corporate management
service allocations are included in the segments' other income (expense).
CONTACT: David F. Kirby
Hudson
212-351-7216
david.kirby@hudson.com
News Source: NASDAQ OMX
01.05.2012 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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---------------------------------------------------------------------------
Language: English
Company: Hudson Highland Group, Inc.
United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US4437921061
WKN:
End of Announcement DGAP News-Service
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Hudson Highland Group, Inc.
01.05.2012 13:00
---------------------------------------------------------------------------
NEW YORK, 2012-05-01 13:00 CEST (GLOBE NEWSWIRE) --
Hudson Global, Inc. (Nasdaq:HSON), a leading global provider of professional
recruitment and related talent solutions, today announced financial results for
the first quarter ended March 31, 2012.
2012 First Quarter Summary
-- Revenue of $200.6 million, a decrease of 8.2 percent from the first quarter
of 2011, or 8.9 percent in constant currency
-- Gross margin of $73.2 million, or 36.5 percent of revenue, representing a
9.8 percent decrease from the same period last year, or 10.1 percent in
constant currency
-- Adjusted EBITDA* loss of $0.9 million, compared with adjusted EBITDA of
$2.4 million in the first quarter of 2011
-- EBITDA* loss of $2.2 million, compared with EBITDA of $2.5 million in the
first quarter of 2011
-- Net loss of $3.2 million, or $0.10 per basic and diluted share, compared
with net loss of $0.0 million, or $0.00 per basic and diluted share, for
the first quarter of 2011
* EBITDA and adjusted EBITDA are defined in the segment tables at the end of
this release.
'Challenging market conditions persisted throughout the first quarter and drove
our results to the low end of our expectations. After making significant
progress in 2011 towards our long-term goals, we have initiated the next phase
of our strategic transition,' said Manuel Marquez, chairman and chief executive
officer at Hudson. 'We will take action to accelerate investment in our growth
businesses, optimize the Hudson service delivery model, and extract synergies
from our back office and business processes. We believe that by taking these
actions, we will make 2012 a foundational year in our progress towards
achieving our long-term financial and strategic goals.'
Commenting on the company's plans, chief financial officer Mary Jane Raymond
said, 'Our action plan is designed to address some of the more imbedded aspects
of our operating model that have caused our earnings progress to be too slow.
We have taken the initial steps to move to a leaner regional structure and more
consistent global operations. Our 2011 efforts to build greater global
coordination have prepared the organization to undertake this work.'
Strategic Transformation
The company launched its strategic transformation program in 2011 and now moves
to accelerate the changes through the following actions:
-- Redirect resources to, and drive sustainable growth from, high potential
strategic businesses, RPO and eDiscovery, and focus on the growth markets
of the world.
-- Optimize its operations in underperforming sectors and markets to deliver
improved performance. The company will re-engineer the delivery model and
consolidate operations globally.
-- Streamline its back office support areas and business processes, and
establish a shared services operation and global centers of excellence, to
gain significant efficiencies of operation.
The above actions will be supported by a restructuring charge of $8 - $10
million during 2012, including $4 - $6 million in the second quarter.
Annualized cost savings are expected to be twice the charge. In 2012, savings
from the program are expected to offset 50 percent of the charge. First quarter
actions related to the restructuring, primarily severance expenses in Europe,
and other charges, totaled $1.3 million.
Regional Highlights
Americas
In the first quarter, Hudson Americas' gross margin increased 14 percent
compared with the prior year period, driven by 100 percent gross margin growth
in permanent recruitment, primarily from strength in RPO. Temporary contracting
was down 3 percent from prior year as Legal eDiscovery declined due to gaps in
large project workflow. Adjusted EBITDA was $0.3 million for the first quarter,
up slightly from $0.2 million a year ago.
Asia Pacific
During the first quarter, European economic conditions and a slowdown in
financial services continued to impact Asia Pacific as some multi-national
clients delayed hiring decisions. Gross margin was down 12 percent in constant
currency in the first quarter from the prior year period, as a 31 percent
increase in talent management could not offset reductions in permanent
recruitment and temporary contracting. China's gross margin was up 6 percent
while all other countries in the region declined in the quarter. Adjusted
EBITDA declined 36 percent to $2.1 million, or 2.9 percent of revenue from $3.2
million in the first quarter of 2011.
Europe
Gross margin in Europe was down 15 percent in constant currency in the first
quarter compared with the first quarter of 2011, as a slowdown in financial
services demand impacted the U.K. business. In continental Europe, growth in
the Netherlands contracting business and steady results in Belgium were not
enough to offset declines in France. Adjusted EBITDA of $1.4 million, or 1.7
percent of revenue, was down from $4.1 million a year ago.
Liquidity and Capital Resources
The company ended the first quarter of 2012 with $81.0 million in liquidity,
composed of $24.9 million in cash and $56.1 million in availability under its
credit facilities. The company used $7.2 million in cash flow from operations
during the quarter and had no outstanding borrowings at the end of the first
quarter, compared with $3.4 million at the end of the fourth quarter of 2011.
Business Outlook
Given the current economic environment, the slowdown in the financial services
sector, and the actions being taken to reposition the business, the company
expects sequential second quarter 2012 revenue growth to range from down
slightly to up 5 percent. Against prior year, revenue may decline by around 20
percent at prevailing exchange rates. The company expects second quarter 2012
adjusted EBITDA between $0 and $3 million before restructuring charges and
expects the charge in the quarter will range from $4 to $6 million. This
compares with revenue of $247.4 million and EBITDA of $7.7 million in the
second quarter of 2011.
Conference Call/Webcast
Hudson will conduct a conference call today at 10:00 a.m. ET to discuss this
announcement. Individuals wishing to listen can access the webcast on the
investor information section of the company's web site at www.hudson.com.
The archived call will be available on the investor information section of the
company's web site at www.hudson.com.
About Hudson
Hudson is a leading provider of permanent recruitment, contract professionals
and talent management services worldwide. From single placements to total
outsourced solutions, Hudson helps clients achieve greater organizational
performance by assessing, recruiting, developing and engaging the best and
brightest people for their businesses. The company employs more than 2,000
professionals serving clients and candidates in approximately 20 countries.
More information is available at www.hudson.com.
Forward-Looking Statements
This press release contains statements that the company believes to be
'forward-looking statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including statements regarding
the company's future financial condition, results of operations, business
operations and business prospects, are forward-looking statements. Words such
as 'anticipate,' 'estimate,' 'expect,' 'project,' 'intend,' 'plan,' 'predict,'
'believe' and similar words, expressions and variations of these words and
expressions are intended to identify forward-looking statements. All
forward-looking statements are subject to important factors, risks,
uncertainties and assumptions, including industry and economic conditions' that
could cause actual results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and assumptions
include, but are not limited to, global economic fluctuations; risks related to
fluctuations in the company's operating results from quarter to quarter; the
ability of clients to terminate their relationship with the company at any
time; competition in the company's markets; risks associated with the company's
investment strategy; risks related to international operations, including
foreign currency fluctuations; the company's ability to implement cost
reduction initiatives effectively, including the recently announced
restructuring program; the company's dependence on key management personnel;
the company's ability to attract and retain highly skilled professionals; risks
in collecting the company's accounts receivable; the company's history of
negative cash flows and operating losses may continue; restrictions on the
company's operating flexibility due to the terms of its credit facilities; the
company's heavy reliance on information systems and the impact of potentially
losing or failing to develop technology; risks related to our dependence on
uninterrupted service to clients; the company's exposure to employment-related
claims from both clients and employers and limits on related insurance
coverage; volatility of the company's stock price; the impact of government
regulations; and restrictions imposed by blocking arrangements. Additional
information concerning these and other factors is contained in the company's
filings with the Securities and Exchange Commission. These forward-looking
statements speak only as of the date of this document. The company assumes no
obligation, and expressly disclaims any obligation, to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
-----------------------------
2012 2011
-----------------------------
Revenue $ 200,590 $ 218,539
Direct costs 127,382 137,341
-----------------------------
Gross margin 73,208 81,198
-----------------------------
Operating expenses:
Selling, general and administrative expenses 74,465 78,808
Depreciation and amortization 1,505 1,576
Business reorganization and integration expenses 940 351
-----------------------------
Total operating expenses 76,910 80,735
-----------------------------
Operating income (loss) (3,702) 463
Other income (expense):
Interest income (expense), net (161) (206)
Other income (expense), net (4) 487
-----------------------------
Income (loss) before provision for income taxes (3,867) 744
Provision for (benefit from) income taxes (646) 750
-----------------------------
Net income (loss) $ (3,221) $ (6)
=============================
Earnings (loss) per share:
Basic $ (0.10) $ (0.00)
=============================
Diluted $ (0.10) $ (0.00)
=============================
Weighted average shares outstanding:
Basic 31,765 31,325
Diluted 31,765 31,325
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
March 31, December
31,
2012 2011
---------------------
ASSETS
Current assets:
Cash and cash equivalents $ 24,930 $ 37,302
Accounts receivable, less allowance for doubtful accounts 132,567 131,489
of $1,680 and $1,772, respectively
Prepaid and other 13,850 13,132
---------------------
Total current assets 171,347 181,923
Property and equipment, net 18,000 17,838
Deferred tax assets, non-current 10,408 8,628
Other assets 6,022 8,157
---------------------
Total assets $ 205,777 $ 216,546
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 11,734 $ 12,025
Accrued expenses and other current liabilities 70,698 74,248
Short-term borrowings -- 3,384
Accrued business reorganization expenses 759 858
---------------------
Total current liabilities 83,191 90,515
Other non-current liabilities 10,593 10,867
Income tax payable, non-current 4,869 7,807
---------------------
Total liabilities 98,653 109,189
=====================
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000 shares -- --
authorized; none issued or outstanding
Common stock, $0.001 par value, 100,000 shares authorized; 33 33
issued 33,283 and 32,776 shares, respectively
Additional paid-in capital 471,719 470,786
Accumulated deficit (400,511) (397,290)
Accumulated other comprehensive income--translation 36,045 34,255
adjustments
Treasury stock, 34 and 79 shares, respectively, at cost (162) (427)
---------------------
Total stockholders' equity 107,124 107,357
---------------------
Total liabilities and stockholders' equity $ 205,777 $ 216,546
=====================
--------------------------------------------------------------------------------
-
--------------------------------------------------------------------------------
-
HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - QUARTER TO DATE
(in thousands)
(unaudited)
For The Three Months Ended Hudson Hudson Hudson Corporate Total
March 31, 2012 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 45,170 $ 74,263 $ 81,157 $ -- $ 200,590
customers
====================================================
Gross margin, from external $ 11,831 $ 29,313 $ 32,064 $ -- $ 73,208
customers
====================================================
Adjusted EBITDA (loss) (1) $ 275 $ 2,124 $ 1,415 $ (4,754) $ (940)
Business reorganization $ 20 $ 67 $ 720 $ 133 $ 940
expenses (recovery)
Office integration expense -- 316 -- -- 316
Non-operating expense 746 1,731 1,782 (4,255) 4
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ (491) $ 8 $ (1,087) $ (631) $ (2,201)
Depreciation and 1,505
amortization expenses
Interest expense (income), 161
net
Provision for (benefit (646)
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ (3,221)
==========
For The Three Months Ended Hudson Hudson Hudson Corporate Total
March 31, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 45,812 $ 79,017 $ 93,710 $ -- $ 218,539
customers
====================================================
Gross margin, from external $ 10,357 $ 31,903 $ 38,938 $ -- $ 81,198
customers
====================================================
Adjusted EBITDA (loss) (1) $ 204 $ 3,151 $ 4,136 $ (5,100) 2,390
Business reorganization $ -- $ -- $ 351 $ -- $ 351
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 583 1,137 1,610 (3,816) (486)
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ (379) $ 2,014 $ 2,175 $ (1,284) $ 2,526
Depreciation and 1,576
amortization expenses
Interest expense (income), 206
net
Provision for (benefit 750
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ (6)
==========
For the Three Months Ended Hudson Hudson Hudson Corporate Total
December 31, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 47,802 $ 83,185 $ 91,751 $ -- $ 222,738
customers
====================================================
Gross margin, from external $ 13,738 $ 33,598 $ 37,312 $ -- $ 84,648
customers
====================================================
Adjusted EBITDA (loss) (1) $ 2,445 $ 4,988 $ 2,967 $ (4,131) $ 6,269
Business reorganization $ -- $ -- $ (27) $ -- $ (27)
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 1,204 1,847 1,854 (4,615) 290
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ 1,241 $ 3,141 $ 1,140 $ 484 $ 6,006
Depreciation and 1,501
amortization expenses
Interest expense (income), 234
net
Provision for (benefit 962
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ 3,309
==========
For the Three Months Ended Hudson Hudson Hudson Corporate Total
June 30, 2011 Americas Asia Europe
Pacific
----------------------------------------------------
Revenue, from external $ 50,912 $ 96,275 $ 100,191 $ -- $ 247,378
customers
====================================================
Gross margin, from external $ 13,021 $ 40,218 $ 42,228 $ -- $ 95,467
customers
====================================================
Adjusted EBITDA (loss) (1) $ 1,838 $ 6,099 $ 5,521 $ (5,402) $ 8,056
Business reorganization $ -- $ -- $ 396 $ -- $ 396
expenses (recovery)
Office integration expense -- -- -- -- --
Non-operating expense 678 2,295 2,390 (5,358) 5
(income), including
corporate administration
charges
----------------------------------------------------
EBITDA (loss) (1) $ 1,160 $ 3,808 $ 2,735 $ (44) $ 7,661
Depreciation and 1,636
amortization expenses
Interest expense (income), 375
net
Provision for (benefit 1,426
from) income taxes
Loss (income) from --
discontinued operations,
net of taxes
----------
Net income (loss) $ 4,224
==========
(1) Non-GAAP earnings before interest, income taxes, and depreciation and
amortization ('EBITDA') and non-GAAP earnings before interest, income taxes,
depreciation and amortization, non-operating income, goodwill and other
impairment charges, business reorganization expenses and other expenses
('Adjusted EBITDA') are presented to provide additional information about the
company's operations on a basis consistent with the measures which the company
uses to manage its operations and evaluate its performance. Management also
uses these measurements to evaluate capital needs and working capital
requirements. EBITDA and adjusted EBITDA should not be considered in isolation
or as a substitute for operating income, cash flows from operating activities,
and other income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of the company's
profitability or liquidity. Furthermore, EBITDA and adjusted EBITDA as
presented above may not be comparable with similarly titled measures reported
by other companies.
HUDSON GLOBAL, INC.
Reconciliation for Constant Currency
(in thousands)
(unaudited)
The company operates on a global basis, with the majority of our gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect our results of operations. Constant currency
information compares financial results between periods as if exchange rates had
remained constant period-over-period. The company currently defines the term
'constant currency' to mean that financial data for a previously reported
period are translated into U.S. dollars using the same foreign currency
exchange rates that were used to translate financial data for the current
period.
Changes in revenue, gross margin, selling, general and administrative expenses
('SG&A'), business reorganization expenses and other non-operating income
(expense), operating income (loss) and EBITDA (loss) include the effect of
changes in foreign currency exchange rates. Variance analysis usually describes
period-to-period variances that are calculated using constant currency as a
percentage. The company's management reviews and analyzes business results in
constant currency and believes these results better represent the company's
underlying business trends.
The company believes that these calculations are a useful measure, indicating
the actual change in operations. There are no significant gains or losses on
foreign currency transactions between subsidiaries. Therefore, changes in
foreign currency exchange rates generally impact only reported earnings.
Three Months Ended March 31,
-------------------------------------------
2012 2011
-------------------------------------------
Currency Constant
As As translati currency
reported reported on
-------------------------------------------
Revenue:
Hudson Americas $ 45,170 $ 45,812 $ (7) $ 45,805
Hudson Asia Pacific 74,263 79,017 4,053 83,070
Hudson Europe 81,157 93,710 (2,472) 91,238
-------------------------------------------
Total $ 200,590 $ 218,539 $ 1,574 $ 220,113
-------------------------------------------
Gross margin:
Hudson Americas $ 11,831 $ 10,356 $ (6) $ 10,350
Hudson Asia Pacific 29,313 31,905 1,472 33,377
Hudson Europe 32,064 38,937 (1,208) 37,729
-------------------------------------------
Total $ 73,208 $ 81,198 $ 258 $ 81,456
-------------------------------------------
SG&A and other non-operating income
(expense) (1):
Hudson Americas $ 12,299 $ 10,733 $ (7) $ 10,726
Hudson Asia Pacific 29,233 29,888 1,413 31,301
Hudson Europe 32,438 36,415 (1,144) 35,271
Corporate 499 1,285 -- 1,285
-------------------------------------------
Total $ 74,469 $ 78,321 $ 262 $ 78,583
-------------------------------------------
Business reorganization expenses:
Hudson Americas $ 20 $ -- $ -- $ --
Hudson Asia Pacific 67 -- -- --
Hudson Europe 720 351 (8) 343
Corporate 133 -- -- --
-------------------------------------------
Total $ 940 $ 351 $ (8) $ 343
-------------------------------------------
Operating income (loss):
Hudson Americas $ (64) $ (118) $ -- $ (118)
Hudson Asia Pacific 1,045 2,432 108 2,540
Hudson Europe 333 3,319 (113) 3,206
Corporate (5,016) (5,170) -- (5,170)
-------------------------------------------
Total $ (3,702) $ 463 $ (5) $ 458
-------------------------------------------
EBITDA (loss):
Hudson Americas $ (491) $ (379) $ (1) $ (380)
Hudson Asia Pacific 8 2,014 59 2,073
Hudson Europe (1,087) 2,175 (55) 2,120
Corporate (631) (1,284) -- (1,284)
-------------------------------------------
Total $ (2,201) $ 2,526 $ 3 $ 2,529
-------------------------------------------
(1) SG&A and other non-operating income (expense) is a measure that management
uses to evaluate the segments' expenses, which include the following captions
on the Condensed Consolidated Statements of Operations: Selling, general and
administrative expenses and other income (expense), net. Corporate management
service allocations are included in the segments' other income (expense).
CONTACT: David F. Kirby
Hudson
212-351-7216
david.kirby@hudson.com
News Source: NASDAQ OMX
01.05.2012 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Hudson Highland Group, Inc.
United States
Phone:
Fax:
E-mail:
Internet:
ISIN: US4437921061
WKN:
End of Announcement DGAP News-Service
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