Hudson Global, Inc.
Hudson Highland Group Reports 2011 First Quarter Financial Results
Hudson Highland Group, Inc. 26.04.2011 22:00 --------------------------------------------------------------------------- NEW YORK, 2011-04-26 22:00 CEST (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, 2011. 2011 First Quarter Summary -- Revenue of $218.5 million, an increase of 21.3 percent over the first quarter of 2010, and approximately flat to the fourth quarter of 2010 -- Permanent recruitment continued to deliver the strongest service line revenue growth, up 31.8 percent from the prior year quarter -- Temporary contracting revenue increased 20.8 percent in the first quarter, representing the fifth consecutive quarter of accelerating growth over the prior year period -- Gross margin of $81.2 million, or 37.2 percent of revenue, up 22.2 percent from the same period last year, and a decrease of 2.1 percent from the fourth quarter of 2010 -- All regions contributed to strong top-line growth, reporting double-digit revenue and gross margin increases in the first quarter compared with the prior year period -- EBITDA* of $2.5 million, or 1.2 percent of revenue, improved from an EBITDA loss of $1.4 million for the first quarter of 2010 -- Net loss of $0.0 million, or $0.00 per basic and diluted share, compared with net loss of $4.2 million, or $0.16 per basic and diluted share, in the first quarter of 2010 * EBITDA is defined in the segment tables at the end of this release and includes other non-operating income. 'We are encouraged that the demand for our services continues to grow,' said Mary Jane Raymond, Hudson Highland Group's interim chief executive officer and chief financial officer. 'This quarter was Hudson's fifth consecutive quarter of increased revenue growth over prior year. Even as some clients continue to face economic uncertainty, they are increasingly relying on Hudson to select their strategic hires.' Regional Results Regional results for the first quarter in constant currency were: -- Europe gross margin was up 18 percent, led by 21 percent growth in the U.K. and 16 percent growth in continental Europe, compared with first quarter 2010 -- Australia/New Zealand gross margin was up 22 percent compared with the prior year period, led by 44 percent growth in permanent recruitment -- Asia gross margin was up 9 percent compared with first quarter 2010 -- Americas gross margin was up 11 percent compared with the prior year period, driven by 9 percent growth in temporary contracting and 27 percent growth in permanent recruitment Liquidity and Capital Resources The company ended the first quarter of 2011 with $71.0 million in liquidity, composed of $28.3 million in cash and $42.7 million in availability under its credit facilities. The company used $10.3 million in cash flow from operations during the quarter and increased its outstanding borrowings from $1.3 million at the end of the fourth quarter to $11.2 million at the end of the first quarter. Cash usage in the first quarter was driven by revenue more weighted to the end of the quarter and payment of annual bonuses. Days Sales Outstanding (DSO) rose to 55 days from 49 at the end of 2010 and 53 a year ago. Guidance The company currently expects second quarter 2011 revenue of $230 - $240 million and EBITDA of $5 - $8 million at prevailing exchange rates. This compares with revenue of $195.0 million and EBITDA of $3.1 million in the second quarter of 2010. 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 Wednesday, April 27, 2011 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 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 more than 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; 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 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 facility; 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; 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 HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited) Three Months Ended March 31, --------------------- 2011 2010 --------------------- Revenue $ 218,539 $ 180,118 Direct costs 137,341 113,697 --------------------- Gross margin 81,198 66,421 --------------------- Operating expenses: Selling, general and administrative expenses 78,808 68,333 Depreciation and amortization 1,576 2,287 Business reorganization and integration expenses 351 113 --------------------- Total operating expenses 80,735 70,733 --------------------- Operating income (loss) 463 (4,312) Other income (expense): Interest, net (206) (232) Other, net 487 658 --------------------- Income (loss) from continuing operations before provision 744 (3,886) for income taxes Provision for income taxes 750 252 --------------------- Loss from continuing operations (6) (4,138) Loss from discontinued operations, net of income taxes -- (69) --------------------- Net loss $ (6) $ (4,207) ===================== Basic earnings (loss) per share: Loss from continuing operations $ (0.00) $ (0.16) Loss from discontinued operations -- (0.00) --------------------- Net loss $ (0.00) $ (0.16) ===================== Diluted earnings (loss) per share: Loss from continuing operations $ (0.00) $ (0.16) Loss from discontinued operations -- (0.00) --------------------- Net loss $ (0.00) $ (0.16) ===================== Weighted average shares outstanding: Basic 31,325 26,257 Diluted 31,325 26,257 -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) March 31, December 2011 31, 2010 --------------------- ASSETS Current assets: Cash and cash equivalents $ 28,311 $ 29,523 Accounts receivable, net 145,505 128,576 Prepaid and other 14,046 13,988 --------------------- Total current assets 187,862 172,087 Property and equipment, net 16,114 16,593 Other assets 18,422 17,154 --------------------- Total assets $ 222,398 $ 205,834 ===================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 11,732 $ 14,812 Accrued expenses and other current liabilities 82,434 74,990 Short-term borrowings 11,156 1,339 Accrued business reorganization expenses 2,176 2,619 --------------------- Total current liabilities 107,498 93,760 Other non-current liabilities 10,491 10,493 Income tax payable, non-current 8,158 8,303 --------------------- Total liabilities 126,147 112,556 ===================== 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 32 issued 32,838 and 32,181 shares, respectively Additional paid-in capital 467,782 466,582 Accumulated deficit (408,205) (408,199) Accumulated other comprehensive income-translation 36,947 34,902 adjustments Treasury stock, 53 and 9 shares, respectively, at cost (306) (39) --------------------- Total stockholders' equity 96,251 93,278 --------------------- Total liabilities and stockholders' equity $ 222,398 $ 205,834 ===================== -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - HUDSON HIGHLAND GROUP, INC. SEGMENT ANALYSIS - QUARTER TO DATE (in thousands) (unaudited) For The Three Hudson Hudson Hudson Hudson Corporate Total Months Ended March Europe ANZ Americas Asia 31, 2011 ------------------------------------------------------------ Revenue, from $ 93,710 $ 70,804 $ 45,812 $ 8,213 $ -- $ 218,539 external customers ============================================================ Gross margin, from $ 38,937 $ 24,019 $ 10,356 $ 7,886 $ -- $ 81,198 external customers ============================================================ Business $ 351 $ -- $ -- $ -- $ -- $ 351 reorganization and integration expenses Non-operating 1,610 1,045 583 91 (3,816) (487) expense (income), including corporate administration charges ------------------------------------------------------------ EBITDA (Loss) (1) $ 2,175 $ 1,041 $ (379) $ 973 $ (1,284) $ 2,526 Depreciation and 1,576 amortization expenses Interest expense 206 (income), net Provision for 750 (benefit from) income taxes Loss (income) from -- discontinued operations, net of taxes ---------- Net income (loss) $ (6) ========== For The Three Hudson Hudson Hudson Hudson Corporate Total Months Ended March Europe ANZ Americas Asia 31, 2010 ------------------------------------------------------------ Revenue, from $ 76,654 $ 56,822 $ 39,507 $ 7,135 $ -- $ 180,118 external customers ============================================================ Gross margin, from $ 32,530 $ 17,776 $ 9,279 $ 6,836 $ -- $ 66,421 external customers ============================================================ Business $ 87 $ (116) $ 142 $ -- $ -- $ 113 reorganization and integration expenses Non-operating 1,178 582 (509) 188 (2,097) (658) expense (income), including corporate administration charges ------------------------------------------------------------ EBITDA (Loss) (1) $ 436 $ 249 $ (241) $ 597 $ (2,408) $ (1,367) Depreciation and 2,287 amortization expenses Interest expense 232 (income), net Provision for 252 (benefit from) income taxes Loss (income) from 69 discontinued operations, net of taxes ---------- Net income (loss) $ (4,207) ========== For the Three Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia December 31, 2010 ------------------------------------------------------------ Revenue, from $ 90,616 $ 74,338 $ 44,268 $ 9,839 $ -- $ 219,061 external customers ============================================================ Gross margin, from $ 37,468 $ 25,231 $ 10,775 $ 9,450 $ -- $ 82,924 external customers ============================================================ Business $ 865 $ 102 $ 21 $ -- $ -- $ 988 reorganization and integration expenses Non-operating 1,337 886 (1,298) 243 (2,980) (1,812) expense (income), including corporate administration charges ------------------------------------------------------------ EBITDA (Loss) (1) $ 314 $ 1,254 $ 2,386 $ 1,524 $ (1,922) $ 3,556 Depreciation and 1,730 amortization expenses Interest expense 306 (income), net Provision for 116 (benefit from) income taxes Loss (income) from 213 discontinued operations, net of taxes ---------- Net income (loss) $ 1,191 ========== For the Three Hudson Hudson Hudson Hudson Corporate Total Months Ended June Europe ANZ Americas Asia 30, 2010 ------------------------------------------------------------ Revenue, from $ 80,717 $ 65,249 $ 40,819 $ 8,184 $ -- $ 194,969 external customers ============================================================ Gross margin, from $ 34,559 $ 21,723 $ 10,039 $ 7,916 $ -- $ 74,237 external customers ============================================================ Business $ 450 $ -- $ 101 $ -- $ -- $ 551 reorganization and integration expenses Non-operating 1,148 1,015 393 38 (3,440) (846) expense (income), including corporate administration charges ------------------------------------------------------------ EBITDA (Loss) (1) $ 2,466 $ 1,369 $ (991) $ 1,311 $ (1,034) $ 3,121 Depreciation and 2,186 amortization expenses Interest expense 243 (income), net Provision for 515 (benefit from) income taxes Loss (income) from (52) discontinued operations, net of taxes ---------- Net income (loss) $ 229 ========== (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. -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - HUDSON HIGHLAND GROUP, 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, direct costs, gross margin, and selling, general and administrative expenses 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. Earnings from subsidiaries are rarely repatriated to the United States, and 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 and not the company's economic condition. For The Three Months Ended March 31, -------------------------------------------- 2011 2010 -------------------------------------------- As As Currency Constant reported reported translati currency on -------------------------------------------- Revenue: Hudson Europe $93,710 $76,654 $1,470 $78,124 Hudson ANZ 70,804 56,822 6,113 62,935 Hudson Americas 45,812 39,507 10 39,517 Hudson Asia 8,213 7,135 389 7,524 -------------------------------------------- Total 218,539 180,118 7,982 188,100 -------------------------------------------- Direct costs: Hudson Europe 54,773 44,124 1,034 45,158 Hudson ANZ 46,785 39,046 4,194 43,240 Hudson Americas 35,456 30,228 (14) 30,214 Hudson Asia 327 299 19 318 -------------------------------------------- Total 137,341 113,697 5,233 118,930 -------------------------------------------- Gross margin: Hudson Europe 38,937 32,530 436 32,966 Hudson ANZ 24,019 17,776 1,919 19,695 Hudson Americas 10,356 9,279 24 9,303 Hudson Asia 7,886 6,836 370 7,206 -------------------------------------------- Total $81,198 $66,421 $2,749 $69,170 ============================================ Selling, general and administrative (a): Hudson Europe $35,271 $31,453 $353 $31,806 Hudson ANZ 22,582 17,608 1,899 19,507 Hudson Americas 10,472 10,785 17 10,802 Hudson Asia 6,890 6,224 322 6,546 Corporate 5,169 4,550 (2) 4,548 -------------------------------------------- Total $80,384 $70,620 $2,589 $73,209 ============================================ (a) Selling, general and administrative expenses include depreciation and amortization expenses. CONTACT: David F. Kirby Hudson Highland Group 212-351-7216 david.kirby@hudson.com News Source: NASDAQ OMX 26.04.2011 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- 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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