Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,501.65 0.00 0.00%
S&P 500 1,878.61 3.22 0.17%
NASDAQ 4,148.34 21.37 0.52%
Ticker Volume Price Price Delta
STOXX 50 3,189.81 13.84 0.44%
FTSE 100 6,703.00 28.26 0.42%
DAX 9,548.68 4.49 0.05%
Ticker Volume Price Price Delta
NIKKEI 14,404.99 -141.28 -0.97%
TOPIX 1,164.90 -8.91 -0.76%
HANG SENG 22,562.80 53.16 0.24%

Hudson Global Reports 2013 First Quarter Results



Hudson Global Reports 2013 First Quarter Results

NEW YORK, May 7, 2013 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq:HSON), a
leading global talent solutions company, today announced financial results for
the first quarter ended March 31, 2013.

2013 First Quarter Summary

  * Revenue of $165.7 million, a decrease of 17.4 percent from the first
    quarter of 2012, or 16.8 percent in constant currency.
  * Gross margin of $56.7 million or 34.2 percent of revenue, representing a
    22.6 percent decrease from the same period last year, or 22.2 percent in
    constant currency.
  * Adjusted EBITDA loss* of $4.9 million, compared with adjusted EBITDA loss
    of $0.9 million in the first quarter of 2012.
  * Restructuring charges of $2.0 million in the first quarter of 2013.
  * EBITDA loss* of $6.6 million, compared with EBITDA loss of $2.2 million in
    the first quarter of 2012.
  * Net loss of $8.2 million, or $0.25 per basic and diluted share, compared
    with net loss of $3.2 million, or $0.10 per basic and diluted share, for
    the first quarter of 2012.

* EBITDA and adjusted EBITDA are defined in the segment tables at the end of
this release.

"Global market conditions continue to be harsh," said Manuel Marquez, chairman
and chief executive officer at Hudson. "As we expected, this had an impact on
our first quarter 2013 results. Notwithstanding this, we are confident we are
making good progress on our strategy. We believe our critical foundational
work will ultimately allow us to better withstand the economic down cycles and
serve as an engine for stronger performance in the future."

"While focusing on our strategy and top line action plans, managing our costs
and liquidity will remain equally important," said Mary Jane Raymond, chief
financial officer at Hudson.

Regional Highlights

Americas

Hudson Americas' gross margin decreased 31 percent in the first quarter
compared with the prior year period due to declines in both temporary
contracting and permanent recruitment. Legal eDiscovery continued to see lower
demand levels with gross margin down 33 percent from the period a year ago,
while RPO gross margin decreased 37 percent compared with the first quarter of
2012 driven by softer hiring trends. Actions taken to reduce costs delivered
SG&A* and headcount reductions of 26 percent and 25 percent, respectively,
from the same period a year ago, offsetting 83 percent of the gross margin
decline. Adjusted EBITDA loss was $0.4 million for the first quarter, or 1.0
percent of revenue, compared with positive $0.3 million for the quarter a year
ago.

Asia Pacific

In Asia Pacific, economic uncertainty and increasing hesitation from clients
contributed to a gross margin decline of 26 percent in constant currency in
the first quarter from the prior year period. A 34 percent decline in
permanent recruitment gross margin accounted for most of the overall gross
margin drop. After 36 percent gross margin growth in 2012, Talent Management
declined 10 percent in the quarter against the prior year quarter as some
client projects were delayed. Actions taken to reduce costs resulted in an
SG&A* decline of 19 percent and headcount decline of 20 percent from the same
period last year, offsetting 67 percent of the gross margin decline from the
period a year ago. The region delivered adjusted EBITDA loss of $0.4 million,
or 0.8 percent of revenue, down from positive $2.1 million, or 2.9 percent of
revenue in the first quarter of 2012.

Europe

Driven by ongoing economic weakness across Europe, gross margin was down 15
percent in constant currency compared with the first quarter of 2012. The U.K.
showed signs of stabilization with smaller declines in temporary recruitment
and strong growth in Legal eDiscovery, though Talent Management was softer. In
continental Europe, reduced hiring activity continued to impact permanent
recruitment, down 29 percent in constant currency. Actions taken to address
costs across Europe resulted in SG&A* and headcount reductions of 11 percent
and 16 percent, respectively, from the same period a year ago, offsetting 70
percent of the gross margin decline from the period a year ago. Adjusted
EBITDA loss of $0.1 million was down from positive $1.4 million, or 1.7
percent of revenue for the quarter a year ago.

* SG&A does not include non-operating expenses and rent redundancy. Refer to
the Segment Analysis later in this document for reconciliation.

Restructuring Program

The company continued its program in the first quarter, resulting in
restructuring charges of $2.0 million, primarily in Europe. During 2013, the
total restructuring charge is expected to be up to $4 million with up to $1
million of the remaining charges to be incurred in the second quarter.

Liquidity and Capital Resources

The company ended the first quarter of 2013 with $69.5 million in liquidity,
composed of $32.5 million in cash and $37.0 million in availability under its
credit facilities. The company used $3.8 million in cash flow from operations
during the quarter. The company had no outstanding borrowings at the end of
the first quarter. 

Business Outlook

Given current economic conditions, second quarter 2013 revenue may decline by
12 to 17 percent against the second quarter of 2012 at prevailing exchange
rates. The company expects second quarter 2013 adjusted EBITDA to be between
negative $2 and positive $1 million before restructuring charges and
anticipates the restructuring charge in the quarter of up to $1 million. In
the second quarter of 2012, revenue was $204.8 million and adjusted EBITDA was
$3.7 million.

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 Hudson.com. 

The archived call will be available on the investor information section of the
company's web site at Hudson.com. 

About Hudson

Hudson is a global talent solutions company with expertise in leadership and
specialized recruitment, contracting solutions, recruitment process
outsourcing, talent management and eDiscovery. We help our clients and
candidates succeed by leveraging our expertise, deep industry and market
knowledge, and proprietary assessment tools and techniques. With approximately
2,000 people in approximately 20 countries, and relationships with millions of
specialized professionals, we bring an unparalleled ability to match talent
with opportunities by assessing, recruiting, developing and engaging the best
and brightest people for our clients. We combine broad geographic presence,
world-class talent solutions and a tailored, consultative approach to help
businesses and professionals achieve higher performance and outstanding
results. More information is available at 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
negative cash flows and operating losses that the company has experienced from
time to time in the past may reoccur in the future; 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.

                           Financial Tables Follow

 
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
                                                                
                                                Three Months Ended March 31,
                                                2013           2012
Revenue                                          $ 165,678      $ 200,590
Direct costs                                     109,001        127,382
Gross margin                                     56,677         73,208
Operating expenses:                                             
Selling, general and administrative expenses     61,589         74,465
Depreciation and amortization                    1,648          1,505
Business reorganization expenses                 1,982          940
Total operating expenses                         65,219         76,910
Operating income (loss)                          (8,542)        (3,702)
Non-operating income (expense):                                 
Interest income (expense), net                   (146)          (161)
Other income (expense), net                      270            (4)
Income (loss) before provision for income taxes  (8,418)        (3,867)
Provision for (benefit from) income taxes        (177)          (646)
Net income (loss)                                $ (8,241)      $ (3,221)
Earnings (loss) per share:                                      
Basic                                            $ (0.25)       $ (0.10)
Diluted                                          $ (0.25)       $ (0.10)
Weighted-average shares outstanding:                            
Basic                                            32,344         31,765
Diluted                                          32,344         31,765

 
 
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
                                                                   
                                                       March 31,  December 31,
                                                       2013       2012
ASSETS                                                             
Current assets:                                                    
Cash and cash equivalents                               $ 32,510   $ 38,653
Accounts receivable, less allowance for doubtful        103,023    107,216
accounts of $1,135 and $1,167, respectively
Prepaid and other                                       11,807     11,543
Total current assets                                    147,340    157,412
Property and equipment, net                             18,910     20,050
Deferred tax assets, non-current                        10,218     9,816
Other assets                                            5,984      6,190
Total assets                                            $ 182,452  $ 193,468
LIABILITIES AND STOCKHOLDERS' EQUITY                               
Current liabilities:                                               
Accounts payable                                        $ 7,878    $ 9,292
Accrued expenses and other current liabilities          56,422     55,960
Short-term borrowings                                   —          —
Accrued business reorganization expenses                2,944      1,916
Total current liabilities                               67,244     67,168
Other non-current liabilities                           6,959      7,853
Deferred rent and tenant improvement contributions      7,533      8,061
Income tax payable, non-current                         3,848      3,845
Total liabilities                                       85,584     86,927
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 32,785 and 33,100 shares,            33         33
respectively
Additional paid-in capital                              474,046    473,372
Accumulated deficit                                     (395,268)  (387,027)
Accumulated other comprehensive income                  18,789     20,536
Treasury stock, 160 and 79 shares, respectively, at     (732)      (373)
cost
Total stockholders' equity                              96,868     106,541
Total liabilities and stockholders' equity              $ 182,452  $ 193,468

 
 
HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - QUARTER TO DATE
(in thousands)
(unaudited)
                                                                     
For The Three Months   Hudson    Hudson       Hudson     Corporate  Total
Ended March 31, 2013   Americas  Asia Pacific Europe
Revenue, from external  $ 37,223  $ 56,201     $ 72,254   $ —        $ 165,678
customers
Gross margin, from      $ 8,144   $ 21,492     $ 27,041   $ —        $ 56,677
external customers
Adjusted EBITDA (loss)  $ (357)   $ (426)      $ (112)    $ (4,017)  $ (4,912)
(1)
Business
reorganization          (17)      102          1,871      26         1,982
expenses (recovery)
Office integration
expense and (gains) on  —         —            —          —          —
disposal of business
Non-operating expense
(income), including     607       339          1,469      (2,685)    (270)
corporate
administration charges
EBITDA (loss) (1)      $ (947)   $ (867)      $ (3,452)  $ (1,358)  $ (6,624)
Depreciation and                                                     1,648
amortization expenses
Interest expense                                                     146
(income), net
Provision for (benefit                                               (177)
from) income taxes
Net income (loss)                                                    $ (8,241)
                                                                     
For The Three Months   Hudson    Hudson       Hudson     Corporate  Total
Ended March 31, 2012   Americas  Asia Pacific Europe
Revenue, from external  $ 45,170  $ 74,263     $ 81,157   $ —        $ 200,590
customers
Gross margin, from      $ 11,831  $ 29,313     $ 32,064   $ —        $ 73,208
external customers
Adjusted EBITDA (loss)  $ 275     $ 2,124      $ 1,415    $ (4,755)  $ (941)
(1)
Business
reorganization          20        67           720        133        940
expenses (recovery)
Office integration
expense and (gains) on  —         316          —          —          316
disposal of business
Non-operating expense
(income), including     746       1,733        1,782      (4,257)    4
corporate
administration charges
EBITDA (loss) (1)       $ (491)   $ 8          $ (1,087)  $ (631)    $ (2,201)
Depreciation and                                                     1,505
amortization expenses
Interest expense                                                     161
(income), net
Provision for (benefit                                               (646)
from) income taxes
Net income (loss)                                                    $ (3,221)

  (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.
SEGMENT ANALYSIS - QUARTER TO DATE (continued)
(in thousands)
(unaudited)
                                                                     
For The Three Months   Hudson    Hudson       Hudson
Ended December 31,     Americas  Asia Pacific Europe     Corporate  Total
2012
Revenue, from external  $ 39,458  $ 63,517     $ 81,301   $ —        $ 184,276
customers
Gross margin, from      $ 9,388   $ 26,361     $ 31,175   $ —        $ 66,924
external customers
Adjusted EBITDA (loss)  $ 1,379   $ 2,334      $ 3,455    $ (4,017)  $ 3,151
(1)
Business
reorganization          (44)      22           213        40         231
expenses (recovery)
Office integration
expense and (gains) on  (558)     —            —          —          (558)
disposal of business
Non-operating expense
(income), including     593       975          641        (2,249)    (40)
corporate
administration charges
EBITDA (loss) (1)       $ 1,388   $ 1,337      $ 2,601    $ (1,808)  $ 3,518
Depreciation and                                                     1,650
amortization expenses
Interest expense                                                     124
(income), net
Provision for (benefit                                               2,086
from) income taxes
Net income (loss)                                                    $ (343)
                                                                     
For The Three Months   Hudson    Hudson       Hudson     Corporate  Total
Ended June 30, 2012    Americas  Asia Pacific Europe
Revenue, from external  $ 45,487  $ 76,926     $ 82,425   $ —        $ 204,838
customers
Gross margin, from      $ 12,359  $ 31,901     $ 32,808   $ —        $ 77,068
external customers
Adjusted EBITDA (loss)  $ 2,452   $ 3,720      $ 2,440    $ (4,887)  $ 3,725
(1)
Business
reorganization          749       1,007        3,149      185        5,090
expenses (recovery)
Office integration
expense and (gains) on  —         190          —          —          190
disposal of business
Non-operating expense
(income), including     945       1,901        1,596      (4,073)    369
corporate
administration charges
EBITDA (loss) (1)       $ 758     $ 622        $ (2,305)  $ (1,001)  $ (1,926)
Depreciation and                                                     1,610
amortization expenses
Interest expense                                                     189
(income), net
Provision for (benefit                                               (4,119)
from) income taxes
Net income (loss)                                                    $ 394

  (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 its gross margin
generated outside of the United States. Accordingly, fluctuations in foreign
currency exchange rates can affect its 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,
                                  2013       2012
                                  As         As         Currency    Constant
                                  reported   reported   translation currency
Revenue:                                                             
Hudson Americas                    $ 37,223   $ 45,170   $ (5)       $ 45,165
Hudson Asia Pacific                56,201     74,263     (803)       73,460
Hudson Europe                      72,254     81,157     (689)       80,468
Total                              $ 165,678  $ 200,590  $ (1,497)   $ 199,093
Gross margin:                                                        
Hudson Americas                    $ 8,144    $ 11,831   $ (5)       $ 11,826
Hudson Asia Pacific                21,492     29,313     (236)       29,077
Hudson Europe                      27,041     32,064     (147)       31,917
Total                              $ 56,677   $ 73,208   $ (388)     $ 72,820
SG&A and other non-operating                                         
income (expense) (1):
Hudson Americas                    $ 9,105    $ 12,299   $ 4         $ 12,303
Hudson Asia Pacific                22,237     29,233     (177)       29,056
Hudson Europe                      28,647     32,438     (113)       32,325
Corporate                          1,330      499        (1)         498
Total                              $ 61,319   $ 74,469   $ (287)     $ 74,182
Business reorganization expenses:                                    
Hudson Americas                    $ (17)     $ 20       $ —         $ 20
Hudson Asia Pacific                102        67         (1)         66
Hudson Europe                      1,871      720        (10)        710
Corporate                          26         133        1           134
Total                              $ 1,982    $ 940      $ (10)      $ 930
Operating income (loss):                                             
Hudson Americas                    $ (592)    $ (64)     $ (8)       $ (72)
Hudson Asia Pacific                (1,359)    1,045      (51)        994
Hudson Europe                      (2,388)    333        (73)        260
Corporate                          (4,203)    (5,016)    —           (5,016)
Total                              $ (8,542)  $ (3,702)  $ (132)     $ (3,834)
EBITDA (loss):                                                       
Hudson Americas                    $ (947)    $ (491)    $ (8)       $ (499)
Hudson Asia Pacific                (867)      8          (58)        (50)
Hudson Europe                      (3,452)    (1,087)    (24)        (1,111)
Corporate                          (1,358)    (631)      (1)         (632)
Total                              $ (6,624)  $ (2,201)  $ (91)      $ (2,292)

  (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

company logo
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement