NEW YORK, April 26, 2011 (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 for income taxes | 744 | (3,886) |
| 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, 2011 |
December 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; issued 32,838 and 32,181 shares, respectively | 33 | 32 |
| Additional paid-in capital | 467,782 | 466,582 |
| Accumulated deficit | (408,205) | (408,199) |
| Accumulated other comprehensive income—translation adjustments | 36,947 | 34,902 |
| 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 Months Ended March 31, 2011 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson Asia |
Corporate |
Total |
| Revenue, from external customers | $ 93,710 | $ 70,804 | $ 45,812 | $ 8,213 | $ -- | $ 218,539 |
| Gross margin, from external customers | $ 38,937 | $ 24,019 | $ 10,356 | $ 7,886 | $ -- | $ 81,198 |
| Business reorganization and integration expenses | $ 351 | $ -- | $ -- | $ -- | $ -- | $ 351 |
| Non-operating expense (income), including corporate administration charges | 1,610 | 1,045 | 583 | 91 | (3,816) | (487) |
| EBITDA (Loss) (1) | $ 2,175 | $ 1,041 | $ (379) | $ 973 | $ (1,284) | $ 2,526 |
| Depreciation and amortization expenses | 1,576 | |||||
| Interest expense (income), net | 206 | |||||
| Provision for (benefit from) income taxes | 750 | |||||
| Loss (income) from discontinued operations, net of taxes | -- | |||||
| Net income (loss) | $ (6) | |||||
| For The Three Months Ended March 31, 2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson Asia |
Corporate |
Total |
| Revenue, from external customers | $ 76,654 | $ 56,822 | $ 39,507 | $ 7,135 | $ -- | $ 180,118 |
| Gross margin, from external customers | $ 32,530 | $ 17,776 | $ 9,279 | $ 6,836 | $ -- | $ 66,421 |
| Business reorganization and integration expenses | $ 87 | $ (116) | $ 142 | $ -- | $ -- | $ 113 |
| Non-operating expense (income), including corporate administration charges | 1,178 | 582 | (509) | 188 | (2,097) | (658) |
| EBITDA (Loss) (1) | $ 436 | $ 249 | $ (241) | $ 597 | $ (2,408) | $ (1,367) |
| Depreciation and amortization expenses | 2,287 | |||||
| Interest expense (income), net | 232 | |||||
| Provision for (benefit from) income taxes | 252 | |||||
| Loss (income) from discontinued operations, net of taxes | 69 | |||||
| Net income (loss) | $ (4,207) | |||||
| For the Three Months Ended December 31, 2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson Asia |
Corporate |
Total |
| Revenue, from external customers | $ 90,616 | $ 74,338 | $ 44,268 | $ 9,839 | $ -- | $ 219,061 |
| Gross margin, from external customers | $ 37,468 | $ 25,231 | $ 10,775 | $ 9,450 | $ -- | $ 82,924 |
| Business reorganization and integration expenses | $ 865 | $ 102 | $ 21 | $ -- | $ -- | $ 988 |
| Non-operating expense (income), including corporate administration charges | 1,337 | 886 | (1,298) | 243 | (2,980) | (1,812) |
| EBITDA (Loss) (1) | $ 314 | $ 1,254 | $ 2,386 | $ 1,524 | $ (1,922) | $ 3,556 |
| Depreciation and amortization expenses | 1,730 | |||||
| Interest expense (income), net | 306 | |||||
| Provision for (benefit from) income taxes | 116 | |||||
| Loss (income) from discontinued operations, net of taxes | 213 | |||||
| Net income (loss) | $ 1,191 | |||||
| For the Three Months Ended June 30, 2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson Asia |
Corporate |
Total |
| Revenue, from external customers | $ 80,717 | $ 65,249 | $ 40,819 | $ 8,184 | $ -- | $ 194,969 |
| Gross margin, from external customers | $ 34,559 | $ 21,723 | $ 10,039 | $ 7,916 | $ -- | $ 74,237 |
| Business reorganization and integration expenses | $ 450 | $ -- | $ 101 | $ -- | $ -- | $ 551 |
| Non-operating expense (income), including corporate administration charges | 1,148 | 1,015 | 393 | 38 | (3,440) | (846) |
| EBITDA (Loss) (1) | $ 2,466 | $ 1,369 | $ (991) | $ 1,311 | $ (1,034) | $ 3,121 |
| Depreciation and amortization expenses | 2,186 | |||||
| Interest expense (income), net | 243 | |||||
| Provision for (benefit from) income taxes | 515 | |||||
| Loss (income) from discontinued operations, net of taxes | (52) | |||||
| 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 reported |
As reported |
Currency translation |
Constant currency |
|
| 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. | ||||