NEW YORK, April 28, 2010 (GLOBE NEWSWIRE) -- Hudson Highland Group, Inc. (Nasdaq:HHGP), one of the world's leading providers of permanent recruitment, contract professionals and talent management solutions, today announced financial results for the first quarter ended March 31, 2010.
2010 First Quarter Summary
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Revenue of $180.1 million, an increase of 9.1 percent from $165.2 million for the first quarter of 2009, and a decrease of $2.4 million or 1.3 percent from the fourth quarter of 2009
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Gross margin of $66.4 million, or 36.9 percent of revenue, up 7.1 percent from $62.0 million, or 37.5 percent of revenue for the same period last year, and a decrease of $3.0 million or 4.3 percent from the fourth quarter of 2009
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EBITDA* loss of $1.4 million, or 0.8 percent of revenue, improved from an EBITDA loss of $14.9 million for the first quarter of 2009, which included $5.8 million of restructuring charges
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Net loss from continuing operations of $4.1 million, or $0.16 per basic and diluted share, compared with net loss from continuing operations of $14.8 million, or $0.59 per basic and diluted share, for the first quarter of 2009
- Net loss of $4.2 million, or $0.16 per basic and diluted share, compared with net loss of $5.6 million, or $0.22 per basic and diluted share, for the first quarter of 2009
* EBITDA is defined in the segment tables at the end of this release and includes other non-operating income.
"The first quarter was characterized by improving economic conditions globally, stronger than expected demand for permanent recruitment, and better year-over-year and sequential performance from all of our regional operations" said Jon Chait, Hudson Highland Group's chairman and chief executive officer.
"We are particularly encouraged by the growth in our UK and Asian operations during the period," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "In markets where demand was somewhat less robust at this stage of the recovery, we still delivered improved profitability over the prior year period as a result of previous cost reduction actions."
Liquidity and Capital Resources
At the end of the first quarter of 2010, the company had $24.1 million in cash and $10.5 million in borrowings under its primary credit facility and $0.9 million in borrowings under its local credit facilities, down from $36.1 million in cash and $10.5 million in borrowings at the end of the fourth quarter of 2009. The primary use of cash in the first quarter was to fund the increase in temporary contracting revenue. In addition, the company had availability as of March 31, 2010 under its primary credit facility of $10.3 million and under local country credit facilities of $4.8 million, for a total of $15.1 million. Subsequent to March 31, 2010, the company raised an additional $19.2 million of net cash proceeds from its recent public offering of common stock.
Guidance
The company currently expects second quarter 2010 revenue of $190 - $200 million at prevailing exchange rates and EBITDA of $1 - $4 million. This compares with revenue of $173.8 million and an EBITDA loss of $9.5 million in the second quarter of 2009.
Additional Information
Additional information about the company's quarterly results can be found in the shareholder letter and the quarterly earnings slides in the investor information section of the company's Web site at www.hudson.com.
Conference Call/Webcast
Hudson Highland Group will conduct a conference call Thursday, April 29, 2010 at 9:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the Web cast 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 Highland Group
Hudson Highland Group, Inc. 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 approximately 2,000 professionals serving clients and candidates in approximately 20 countries. More information is available at www.hudson.com.
Safe Harbor Statement
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; the ability of clients to terminate their relationship with the company at any time; risks in collecting the company's accounts receivable; the company's history of negative cash flows and operating losses may continue; the company's limited borrowing availability under its credit facility, which may negatively impact its liquidity; restrictions on the company's operating flexibility due to the terms of its credit facility; risks related to fluctuations in the company's operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; risks associated with the company's investment strategy; risks and financial impact associated with dispositions of underperforming assets; implementation of the company's cost reduction initiatives effectively; the company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; competition in the company's markets; the company's exposure to employment-related claims from both clients and employers and limits on related insurance coverage; the company's dependence on key management personnel; the company's ability to attract and retain highly skilled professionals; 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.
Financial Tables Follow
| HUDSON HIGHLAND GROUP, INC. | |||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||
| (in thousands, except share and per share amounts) | |||
| (unaudited) | |||
|
Three Months Ended March 31, |
|||
| 2010 | 2009 | ||
| Revenue | $ 180,118 | $ 165,150 | |
| Direct costs | 113,697 | 103,146 | |
| Gross margin | 66,421 | 62,004 | |
| Operating expenses: | |||
| Selling, general and administrative expenses | 68,333 | 71,702 | |
| Depreciation and amortization | 2,287 | 3,788 | |
| Business reorganization and integration expenses | 113 | 5,839 | |
| Goodwill and other impairment charges | -- | -- | |
| Total operating expenses | 70,733 | 81,329 | |
| Operating (loss) income | (4,312) | (19,325) | |
| Other (expense) income: | |||
| Interest, net | (232) | (191) | |
| Other, net | 658 | 621 | |
| (Loss) income from continuing operations before income taxes | (3,886) | (18,895) | |
| Provision (benefit) for income taxes | 252 | (4,060) | |
| (Loss) income from continuing operations | (4,138) | (14,835) | |
| (Loss) income from discontinued operations, net of income taxes | (69) | 9,276 | |
| Net (loss) income | $ (4,207) | $ (5,559) | |
| Basic and duluted (loss) income per share: | |||
| (Loss) income from continuing operations | $ (0.16) | $ (0.59) | |
| (Loss) income from discontinued operations | -- | 0.37 | |
| Net (loss) income | $ (0.16) | $ (0.22) | |
| Weighted average shares outstanding: | |||
| Basic and diluted | 26,257 | 25,171 | |
| HUDSON HIGHLAND GROUP, INC. | |||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||
| (in thousands, except per share amounts) | |||
| (unaudited) | |||
| March 31, 2010 | December 31, 2009 | ||
| ASSETS | |||
| Current assets: | |||
| Cash and cash equivalents | $ 24,128 | $ 36,064 | |
| Accounts receivable, net | 113,213 | 98,994 | |
| Prepaid and other | 13,752 | 13,308 | |
| Total current assets | 151,093 | 148,366 | |
| Property and equipment, net | 17,874 | 19,433 | |
| Other assets | 12,420 | 14,145 | |
| Total assets | $ 181,387 | $ 181,944 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||
| Current liabilities: | |||
| Accounts payable | $ 12,844 | $ 12,811 | |
| Accrued expenses and other current liabilities | 62,395 | 54,103 | |
| Short-term borrowings | 11,380 | 10,456 | |
| Accrued business reorganization expenses | 5,315 | 8,784 | |
| Total current liabilities | 91,934 | 86,154 | |
| Other non-current liabilities | 9,603 | 10,768 | |
| Income tax payable, non-current | 8,573 | 8,415 | |
| Accrued business reorganization expenses, non-current | 369 | 347 | |
| Total liabilities | 110,479 | 105,684 | |
| 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; issued 27,319 and 26,836 shares, respectively | 27 | 27 | |
| Additional paid-in capital | 446,118 | 445,541 | |
| Accumulated deficit | (407,721) | (403,514) | |
| Accumulated other comprehensive income—translation adjustments | 32,484 | 34,509 | |
| Treasury stock, 0 and 114 shares, respectively, at cost | -- | (303) | |
| Total stockholders' equity | 70,908 | 76,260 | |
| Total liabilities and stockholders' equity | $ 181,387 | $ 181,944 | |
| HUDSON HIGHLAND GROUP, INC. | ||||||
| SEGMENT ANALYSIS | ||||||
| (in thousands) | ||||||
| (unaudited) | ||||||
|
For The Three Months Ended March 31, 2010 |
Hudson Americas | Hudson Europe | Hudson ANZ | Hudson Asia | Corporate | Total |
| Revenue | $ 39,507 | $ 76,654 | $ 56,822 | $ 7,135 | $ -- | $ 180,118 |
| Gross margin | $ 9,279 | $ 32,530 | $ 17,776 | $ 6,836 | $ -- | $ 66,421 |
|
Business reorganization and integration expenses (recovery) |
$ 142 | $ 87 | $ (116) | $ -- | $ -- | $ 113 |
| Non-operating expense (income), including corporate administration charges | (509) | 1,178 | 582 | 188 | (2,097) | (658) |
| EBITDA (Loss) (1) | $ (241) | $ 436 | $ 249 | $ 597 | $ (2,408) | $ (1,367) |
| Depreciation and amortization expenses | 2,287 | |||||
| Interest expense (income) | 232 | |||||
| Provision for (benefits from) income taxes | 252 | |||||
| Loss (income) from discontinued operations, net of taxes | 69 | |||||
| Net Income (loss) | $ (4,207) | |||||
|
For The Three Months Ended March 31, 2009 (2) |
Hudson Americas | Hudson Europe | Hudson ANZ | Hudson Asia | Corporate | Total |
| Revenue (2) | $ 44,023 | $ 66,387 | $ 49,997 | $ 4,743 | $ -- | $ 165,150 |
| Gross margin | $ 10,962 | $ 30,313 | $ 16,303 | $ 4,426 | $ -- | $ 62,004 |
| Business reorganization and integration expenses (recovery) | $ 1,624 | $ 2,338 | $ 1,884 | $ (7) | $ -- | $ 5,839 |
| Non-operating expense (income), including corporate administration charges | 605 | 192 | 172 | (389) | (1,201) | (621) |
| EBITDA (Loss) (1) | (5,391) | (3,611) | (1,751) | (615) | (3,548) | (14,916) |
| Depreciation and amortization expenses | 3,788 | |||||
| Interest expense (income) | 191 | |||||
| Provision for (benefits from) income taxes | (4,060) | |||||
| Loss (income) from discontinued operations, net of taxes | (9,276) | |||||
| Net Income (loss) | $ (5,559) | |||||
|
For the Three Months Ended June 30, 2009 |
Hudson Americas | Hudson Europe | Hudson ANZ | Hudson Asia | Corporate | Total |
| Revenue | $ 43,133 | $ 68,187 | $ 56,653 | $ 5,875 | $ -- | $ 173,848 |
| Gross margin | $ 10,512 | $ 31,280 | $ 17,660 | $ 5,432 | $ -- | $ 64,884 |
| Business reorganization and integration expenses (recovery) | $ 1,124 | $ 2,328 | $ (8) | $ 104 | $ 14 | $ 3,562 |
| Goodwill and other impairment charges (recovery) | (120) | -- | -- | 1,669 | -- | 1,549 |
| Non-operating expense (income), including corporate administration charges | 531 | 690 | (243) | 168 | (1,200) | (54) |
| EBITDA (Loss) (1) | $ (2,002) | $ (2,220) | $ 817 | $ (2,063) | $ (4,035) | $ (9,503) |
| Depreciation and amortization expenses | 2,840 | |||||
| Interest expense (income) | 182 | |||||
| Provision for (benefits from) income taxes | 2,975 | |||||
| Loss (income) from discontinued operations, net of taxes | 2,272 | |||||
| Net Income (loss) | $ (17,771) | |||||
| (1) Non-GAAP earnings before interest, income taxes, and depreciation and amortization ("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 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 as presented above may not be comparable with similarly titled measures reported by other companies. | ||||||
| (2) Prior year revenue has been reclassed to conform to current year presentation. | ||||||