Hudson Global, Inc.
Hudson Highland Group Reports 2011 Second Quarter Financial Results
Hudson Highland Group, Inc. 27.07.2011 13:00 --------------------------------------------------------------------------- NEW YORK, 2011-07-27 13:00 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 second quarter ended June 30, 2011. 2011 Second Quarter Summary -- Revenue of $247.4 million, an increase of 26.9 percent over the second quarter of 2010, or 13.8 percent in constant currency -- Permanent recruitment remained strong, increasing 28.0 percent from the prior year quarter, or 13.3 percent in constant currency -- Temporary contracting revenue increased 27.2 percent in the second quarter, or 14.8 percent in constant currency, representing the sixth consecutive quarter of accelerating growth over the prior year period -- Gross margin of $95.5 million, or 38.6 percent of revenue, up 28.6 percent from the same period last year, or 14.7 percent in constant currency -- EBITDA* of $7.7 million, or 3.1 percent of revenue, improved from $3.1 million in the second quarter of 2010 -- Net income of $4.2 million, or $0.13 per basic and diluted share, compared with net income of $0.2 million, or $0.01 per basic and diluted share, in the second quarter of 2010 * EBITDA is defined in the segment tables at the end of this release and includes other non-operating income. 'Our team delivered solid year-over-year growth on the top and bottom lines in every region of the world,' said Manuel Marquez, chairman and chief executive officer of Hudson Highland Group. 'We experienced particular market demand strength for our Legal and recruitment process outsourcing (RPO) solutions. While the global economic recovery remains uncertain, the quality and experience of our consultant base and geographic breadth should help us deliver further financial performance gains during the second half of the year.' 'Improving net income and solid operating cash flow during the quarter reflect productivity improvements, return on key investments and market recognition of our service value,' added Mary Jane Raymond, the company's chief financial officer. 'Our year-to-date results also reflect some benefits of worldwide currency movements, though that could vary during the second half given the global environment.' Regional Results Regional results for the second quarter in constant currency were: -- Europe gross margin was up 9.7 percent, led by 10.5 percent growth in continental Europe and 9.0 percent growth in the U.K., compared with second quarter 2010 -- Australia/New Zealand gross margin was up 16.4 percent compared with the prior year period, led by 27.5 percent growth in permanent recruitment -- Americas gross margin was up 29.5 percent compared with the prior year period, driven by 20.4 percent growth in temporary contracting and good improvements in permanent recruitment -- Asia gross margin was up 14.0 percent compared with second quarter 2010 Liquidity and Capital Resources The company ended the second quarter of 2011 with $77.7 million in liquidity, composed of $34.9 million in cash and $42.8 million in availability under its credit facilities. The company generated $10.1 million in cash flow from operations during the quarter and reduced its outstanding borrowings from $11.2 million at the end of the first quarter to $10.1 million at the end of the second quarter. Guidance The company currently expects third quarter 2011 revenue of $230 - $240 million and EBITDA of $5 - $7 million at prevailing exchange rates. This compares with revenue of $200.4 million and EBITDA of $1.2 million in the third 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, July 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. HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------------------------------- 2011 2010 2011 2010 ------------------------------------------- Revenue $ 247,378 $ 194,969 $ 465,917 $ 375,087 Direct costs 151,911 120,732 289,252 234,430 ------------------------------------------- Gross margin 95,467 74,237 176,665 140,657 ------------------------------------------- Operating expenses: Selling, general and 87,405 71,411 166,213 139,743 administrative expenses Depreciation and amortization 1,636 2,186 3,213 4,472 Business reorganization and 396 551 747 664 integration expenses ------------------------------------------- Total operating expenses 89,437 74,148 170,173 144,879 ------------------------------------------- Operating income (loss) 6,030 89 6,492 (4,222) Other (expense) income: Interest, net (375) (243) (581) (475) Other, net (5) 846 482 1,501 Income (loss) from continuing 5,650 692 6,393 (3,196) operations before provision for income taxes Provision for income taxes 1,426 515 2,175 766 ------------------------------------------- Income (loss) from continuing 4,224 177 4,218 (3,962) operations Income (loss) from discontinued -- 52 -- (17) operations, net of income taxes ------------------------------------------- Net income (loss) $ 4,224 $ 229 $ 4,218 $ (3,979) =========================================== Basic earnings (loss) per share: Income (loss) from continuing $ 0.13 $ 0.01 $ 0.13 $ (0.14) operations Income (loss) from discontinued -- 0.00 -- (0.00) operations ------------------------------------------- Net income (loss) $ 0.13 $ 0.01 $ 0.13 $ (0.14) =========================================== Diluted earnings (loss) per share: Income (loss) from continuing $ 0.13 $ 0.01 $ 0.13 $ (0.14) operations Income (loss) from discontinued -- 0.00 -- (0.00) operations ------------------------------------------- Net income (loss) $ 0.13 $ 0.01 $ 0.13 $ (0.14) =========================================== Weighted average shares outstanding: Basic 31,593 30,947 31,501 28,616 Diluted 32,039 31,311 31,939 28,616 HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) June 30, December 31, 2011 2010 --------------------- ASSETS Current assets: Cash and cash equivalents $ 34,933 $ 29,523 Accounts receivable, net 159,383 128,576 Prepaid and other 14,973 13,988 --------------------- Total current assets 209,289 172,087 Property and equipment, net 17,095 16,593 Other assets 18,131 17,154 --------------------- Total assets $ 244,515 $ 205,834 ===================== LIABILITIES AND STOCKHOLDERS' EQUITY Other (expense) income: Accounts payable $ 13,784 $ 14,812 Accrued expenses and other current liabilities 96,761 74,990 Short-term borrowings 10,145 1,339 Accrued business reorganization expenses 1,821 2,619 --------------------- Total current liabilities 122,511 93,760 Other non-current liabilities 10,771 10,493 Income tax payable, non-current 8,319 8,303 --------------------- Total liabilities 141,601 112,556 ===================== 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 32,934 and 32,181 shares, respectively Additional paid-in capital 469,009 466,582 Accumulated deficit (403,975) (408,199) Accumulated other comprehensive income--translation 38,177 34,902 adjustments Treasury stock, 58 and 9 shares, respectively, at cost (330) (39) --------------------- Total stockholders' equity 102,914 93,278 --------------------- Total liabilities and stockholders' equity $ 244,515 $ 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 Europe ANZ Americas Asia June 30, 2011 -------------------------------------------------------------- Revenue, from $ 100,191 $ 86,143 $ 50,912 $ 10,132 $ -- $ 247,378 external customers ============================================================== Gross margin, $ 42,228 $ 30,534 $ 13,021 $ 9,684 $ -- $ 95,467 from external customers ============================================================== Business $ 396 $ -- $ -- $ -- $ -- $ 396 reorganization and integration expenses Non-operating 2,390 1,375 678 920 (5,358) 5 expense (income), including corporate administration charges -------------------------------------------------------------- EBITDA (Loss) (1) $ 2,735 $ 3,037 $ 1,160 $ 773 $ (44) $ 7,661 Depreciation and 1,636 amortization expenses Interest expense 375 (income), net Provision for 1,426 (benefit from) income taxes Loss (income) from -- discontinued operations, net of taxes ---------- Net income (loss) $ 4,224 ========== For the Three Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia June 30, 2010 -------------------------------------------------------------- Revenue, from $ 80,717 $ 65,249 $ 40,819 $ 8,184 $ -- $ 194,969 external customers ============================================================== Gross margin, $ 34,559 $ 21,723 $ 10,039 $ 7,916 $ -- $ 74,237 from 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 ========== For the Three Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia September 30, 2010 -------------------------------------------------------------- Revenue, from $ 80,503 $ 72,974 $ 37,839 $ 9,078 $ -- $ 200,394 external customers ============================================================== Gross margin, $ 32,647 $ 24,259 $ 9,311 $ 8,774 $ -- $ 74,991 from external customers ============================================================== Business $ -- $ -- $ 41 $ -- $ -- $ 41 reorganization and integration expenses Non-operating 3,088 1,433 (407) 478 (5,213) (621) expense (income), including corporate administration charges -------------------------------------------------------------- EBITDA (Loss) (1) $ (2,128) $ 1,376 $ 532 $ 1,169 $ 244 $ 1,193 Depreciation and 1,981 amortization expenses Interest expense 497 (income), net Provision for 599 (benefit from) income taxes Loss (income) from 14 discontinued operations, net of taxes ---------- Net income (loss) $ (1,898) ========== For the Three Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia March 31, 2011 -------------------------------------------------------------- Revenue, from $ 93,710 $ 70,804 $ 45,812 $ 8,213 $ -- $ 218,539 external customers ============================================================== Gross margin, $ 38,937 $ 24,019 $ 10,356 $ 7,886 $ -- $ 81,198 from 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) ========== (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. SEGMENT ANALYSIS - YEAR TO DATE (in thousands) (unaudited) For the Six Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia June 30, 2011 ---------------------------------------------------------------- Revenue, from $ 193,901 $ 156,947 $ 96,725 $ 18,344 $ -- $ 465,917 external customers ================================================================ Gross margin, $ 81,164 $ 54,553 $ 23,379 $ 17,569 $ -- $ 176,665 from external customers ================================================================ Business $ 747 $ -- $ -- $ -- $ -- $ 747 reorganization and integration expenses Non-operating 4,000 2,420 1,261 1,011 (9,174) (482) expense (income), including corporate administration charges ---------------------------------------------------------------- EBITDA (Loss) $ 4,910 $ 4,077 $ 781 $ 1,745 $ (1,326) $ 10,187 (1) Depreciation 3,213 and amortization expenses Interest 581 expense (income), net Other (expense) 2,175 income: Loss (income) -- from discontinued operations, net of taxes ---------- Net income $ 4,218 (loss) ========== For the Six Hudson Hudson Hudson Hudson Corporate Total Months Ended Europe ANZ Americas Asia June 30, 2010 ---------------------------------------------------------------- Revenue, from $ 157,372 $ 122,071 $ 80,325 $ 15,319 $ -- $ 375,087 external customers ================================================================ Gross margin, $ 67,074 $ 39,499 $ 19,331 $ 14,753 $ -- $ 140,657 from external customers ================================================================ Goodwill and $ -- $ -- $ -- $ -- $ -- $ -- other impairment (recovery) Business 537 (116) 243 -- -- 664 reorganization and integration expenses Non-operating 2,326 1,597 (116) 226 (5,534) (1,501) expense (income), including corporate administration charges ---------------------------------------------------------------- EBITDA (Loss) $ 2,901 $ 1,617 $ (1,232) $ 1,907 $ (3,442) $ 1,751 (1) Depreciation 4,472 and amortization expenses Interest 475 expense (income), net Provision for 766 (benefit from) income taxes Loss (income) 17 from discontinued operations, net of taxes ---------- Net income $ (3,979) (loss) ========== -------------------------------------------------------------------------------- (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 June 30, --------------------------------------------- 2011 2010 --------------------------------------------- As As Currency Constant reported reported translatio currency n --------------------------------------------- Revenue: Hudson Europe $ 100,191 $ 80,717 $ 8,585 $ 89,302 Hudson ANZ 86,143 65,249 13,203 78,452 Other (expense) income: 50,912 40,819 13 40,832 Hudson Asia 10,132 8,184 602 8,786 --------------------------------------------- Total 247,378 194,969 22,403 217,372 --------------------------------------------- Direct costs: Hudson Europe 57,963 46,158 4,667 50,825 Hudson ANZ 55,609 43,526 8,698 52,224 Hudson Americas 37,891 30,780 -- 30,780 Hudson Asia 448 268 24 292 --------------------------------------------- Total 151,911 120,732 13,389 134,121 --------------------------------------------- Gross margin: Hudson Europe 42,228 34,559 3,918 38,477 Hudson ANZ 30,534 21,723 4,505 26,228 Hudson Americas 13,021 10,039 13 10,052 Hudson Asia 9,684 7,916 578 8,494 --------------------------------------------- Total $ 95,467 $ 74,237 $ 9,014 $ 83,251 ============================================= Selling, general and administrative (a): Hudson Europe $37,180 $31,296 $3,536 $34,832 Hudson ANZ 26,803 19,883 3,952 23,835 Hudson Americas 11,358 11,223 19 11,242 Hudson Asia 8,056 6,689 466 7,155 Corporate 5,644 4,506 2 4,508 --------------------------------------------- Total $ 89,041 $ 73,597 $ 7,975 $ 81,572 ============================================= (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 27.07.2011 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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