Hudson Highland Group Reports 2009 Third Quarter Financial Results
NEW YORK, Nov 03, 2009 (PR Newswire Europe via COMTEX) --
Company: Hudson Highland Group Inc (HHGP)
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 third quarter ended September 30, 2009.
2009 Third Quarter Summary
- Revenue of US$169.6 million, a decrease of 37.0 percent from
US$269.2 million for the third quarter of 2008, and a decrease of
US$4.2 million or 2.4 percent from the second quarter of 2009
- Gross margin of US$64.2 million, or 37.8 percent of revenue, down
43.0 percent from US$112.7 million, or 41.9 percent of revenue for the
same period last year, and a decrease of US$0.7 million or 1.1 percent
from the second quarter of 2009
- Adjusted EBITDA* loss of US$3.2 million, or 1.9 percent of revenue,
down from adjusted EBITDA of positive US$6.6 million for the third
quarter of 2008, and an improvement from the adjusted EBITDA loss of
US$4.4 million in the second quarter of 2009
- EBITDA* loss of US$6.1 million, down from EBITDA of positive US$3.8
million for the same period in 2008
- Net loss from continuing operations of US$7.6 million, or US$0.29 per
basic and diluted share, compared with net income from continuing
operations of US$0.4 million, or US$0.01 per basic and diluted share,
for the third quarter of 2008
- Net loss of US$6.9 million, or US$0.26 per basic and diluted share,
compared with net loss of US$0.3 million, or US$0.01 per basic and
diluted share, for the third quarter of 2008
*Adjusted EBITDA and EBITDA are defined in the segment tables at the end of this release.
"Sequential improvement of adjusted EBITDA during the third quarter was encouraging," said Jon Chait, Hudson Highland Group's chairman and chief executive officer. "This achievement was counter to typical third quarter seasonal softness and resulted from the company's earlier restructuring actions and increased sequential demand in some markets. While we expect the environment to remain challenging, I expect we will continue to deliver improved sequential financial results for the fourth quarter of 2009 and into 2010."
"We continued to manage our cash well, ending the quarter with US$44.5 million, as our Days Sales Outstanding decreased to 48 days," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "We used US$2.8 million of cash during the third quarter, of which US$1.7 Million was used for an earn-out payment on our Tony Keith acquisition in China and US$0.9 million was a repayment on our credit facility. Cash flow from operations showed significant improvement from the first half of the year with a net use under US$1 million."
Restructuring Program
During the fourth quarter of 2009, the company expects to continue to streamline its operations in response to current economic conditions. The company recently increased the size of its 2009 restructuring plan to US$19 million and expects to incur US$2 - US$5 million of restructuring charges during the fourth quarter of 2009. Third quarter restructuring expenses of US$2.9 million were related to severance and lease terminations, primarily in Europe.
Liquidity and Capital Resources
The company ended the third quarter of 2009 with US$44.5 million in cash and US$10.5 million currently borrowed under its primary credit facility, down from US$47.2 million in cash at the end of the second quarter of 2009 with US$11.3 million borrowed. In addition, the company has availability under its primary credit facility of US$2.3 million, as well as an additional US$3.8 million of availability under local country credit facilities, the majority of which became available subsequent to September 30, 2009. The company paid US$1.7 million in July 2009 as part of its earn-out for the Tony Keith acquisition in China.
Guidance
Despite recent signs of increasing stability, visibility remains low. As a result, the company will not provide formal guidance for the fourth quarter of 2009. The company will comment on current trends and its outlook for the fourth quarter on its third quarter earnings call.
Additional Information
Additional information about the company's quarterly results can be found in the shareholder letter and the third quarter 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, November 4, 2009 at 9:00 a.m. ET to discuss this announcement. Individuals wishing to participate can join the conference call by dialing +1-800-374-1532 followed by the participant passcode 36219796 at 8:50 a.m. ET. For those outside the United States, please call +1-706-634-5594 followed by the participant passcode 36219796. Hudson Highland Group's quarterly conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company's Web site at www.hudson.com.
The archived call will be available for two weeks by dialing +1-800-642-1687 followed by the participant passcode 36219796. For those outside the United States, the call will be available on +1-706-645-9291 followed by the participant passcode 36219796.
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 nearly 2,500 professionals serving clients and candidates in more than 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 those under the caption "Guidance" and other 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 risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to, the impact of global economic fluctuations including the current economic downturn; the ability of clients to terminate their relationship with the company at any time; risks in collecting our accounts receivable; implementation of the company's cost reduction initiatives effectively; the company's history of negative cash flows and operating losses may continue; the company's limited borrowing availability under our credit facility, which may negatively impact our liquidity; restrictions on the company's operating flexibility due to the terms of its credit facility; fluctuations in the company's operating results from quarter to quarter; risks relating to the company's international operations, including foreign currency fluctuations; risks related to our investment strategy; risks and financial impact associated with dispositions of underperforming assets; 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 and the company's dependence on highly skilled professionals; 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; volatility of stock price; the impact of government regulations; financial impact of audits by various taxing authorities; 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 letter. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts' expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial Tables Follow
(All figures are in US$)
HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Nine Months
Ended September Ended September
30, 30,
---- ---- ---- ----
2009 2008 2009 2008
---- ---- ---- ----
Revenue $169,647 $269,239 $508,186 $865,398
Direct costs 105,457 156,544 317,108 495,123
------- ------- ------- -------
Gross margin 64,190 112,695 191,078 370,275
------ ------- ------- -------
Operating expenses:
Selling, general and
administrative expenses 67,412 106,080 208,442 345,478
Depreciation and amortization 2,741 3,913 9,369 11,274
Business reorganization and
integration expenses 2,878 2,817 12,279 5,033
Goodwill and other impairment
charges - - 1,549 -
--- --- ----- ---
Total operating expenses 73,031 112,810 231,639 361,785
------ ------- ------- -------
Operating (loss) income (8,841) (115) (40,561) 8,490
Other (expense) income :
Interest, net (96) 337 (469) 895
Other, net 99 603 773 1,963
-- --- --- -----
(Loss) income from continuing
operations before provision for
income taxes (8,838) 825 (40,257) 11,348
(Benefit) provision for income
taxes (1,215) 464 (2,300) 8,524
------- --- ------- -----
(Loss) income from continuing
operations (7,623) 361 (37,957) 2,824
Income (loss) from discontinued
operations, net of income taxes 770 (670) 7,773 3,187
--- ----- ----- -----
Net (loss) income $(6,853) $(309) $(30,184) $6,011
======== ====== ========= ======
Basic earnings (loss) per share:
(Loss) income from continuing
operations $(0.29) $0.01 $(1.46) $0.11
Income (loss) from discontinued
operations 0.03 (0.02) 0.30 0.13
---- ------ ---- ----
Net (loss) income $(0.26) $(0.01) $(1.16) $0.24
======= ======= ======= =====
Diluted earnings (loss) per share:
(Loss) income from continuing
operations $(0.29) $0.01 $(1.46) $0.11
Income (loss) from discontinued
operations 0.03 (0.02) 0.30 0.13
---- ------ ---- ----
Net (loss) income $(0.26) $(0.01) $(1.16) $0.24
======= ======= ======= =====
Weighted average shares outstanding:
Basic 26,320 25,245 25,938 25,180
Diluted 26,320 25,630 25,938 25,550
HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amount)
(unaudited)
September 30, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $44,483 $49,209
Accounts receivable, net 96,994 127,169
Prepaid and other 13,169 15,411
Current assets from discontinued operations 314 2,360
--- -----
Total current assets 154,960 194,149
Intangibles, net 1,231 2,498
Property and equipment, net 19,306 24,379
Other assets 15,767 9,927
Total assets $191,264 $230,953
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $10,009 $15,693
Accrued expenses and other current liabilities 57,523 76,447
Short-term borrowings 10,456 5,307
Accrued business reorganization expenses 6,761 5,724
Current liabilities from discontinued
operations 72 1,410
-- -----
Total current liabilities 84,821 104,581
Other non-current liabilities 19,734 16,904
Accrued business reorganization expenses,
non-current 548 1,476
--- -----
Total liabilities 105,103 122,961
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 26,764 and 26,494 shares,
respectively 27 26
Additional paid-in capital 445,387 450,739
Accumulated deficit (393,089) (362,905)
Accumulated other comprehensive income-
translation adjustments 34,128 27,054
Treasury stock, 111 and 1,140 shares,
respectively, at cost (292) (6,922)
----- -------
Total stockholders' equity 86,161 107,992
------ -------
Total liabilities and stockholders' equity $191,264 $230,953
======== ========
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For The Three
Months Ended Hudson
September 30, Hudson Hudson Asia
2009 Americas Europe Pacific Corporate Total
--------- ------- -------- --------- -----
Revenue $35,705 $67,898 $66,044 $- $169,647
======= ======= ======= == ========
Gross margin $9,258 $29,571 $25,361 $- $64,190
------ ------- ------- -- -------
Adjusted
EBITDA (1) $(1,625) $30 $2,579 $(4,206) $(3,222)
Business
reorganization
and
integration
expenses 592 1,881 405 - 2,878
Goodwill and
other
impairment
charges - - - - -
--- --- --- --- ---
EBITDA (1) (2,217) (1,851) 2,174 (4,206) (6,100)
Depreciation
and
amortization 1,047 911 739 44 2,741
----- --- --- -- -----
Operating
(loss) income $(3,264) $(2,762) $1,435 $(4,250) $(8,841)
======== ======== ====== ======== ========
For The Three
Months Ended Hudson
September 30, Hudson Hudson Asia
2008 Americas Europe Pacific Corporate Total
--------- ------- -------- --------- -----
Revenue $66,485 $98,301 $104,453 $- $269,239
======= ======= ======== === ========
Gross margin $17,967 $49,717 $45,011 $- $112,695
------- ------- ------- --- --------
Adjusted
EBITDA (1) $1,586 $3,403 $7,631 $(6,005) $6,615
Business
reorganization
and
integration
expenses 121 813 1,883 - 2,817
Goodwill and
other
impairment
charges - - - - -
--- --- --- --- ---
EBITDA (1) 1,465 2,590 5,748 (6,005) 3,798
Depreciation
and
amortization 1,175 1,495 1,190 53 3,913
----- ----- ----- -- -----
Operating
income (loss) $290 $1,095 $4,558 $(6,058) $(115)
==== ====== ====== ======== ======
(1) Non-GAAP earnings before interest, income taxes, special charges,
other non-operating expense, and depreciation and amortization
("Adjusted EBITDA") and non-GAAP earnings before interest, income
taxes, other non-operating expense, 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. Adjusted EBITDA and 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, adjusted EBITDA and EBITDA as presented
above may not be comparable with similarly titled measures reported
by other companies.
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For The Nine
Months Ended Hudson
September 30, Hudson Hudson Asia
2009 Americas Europe Pacific Corporate Total
--------- ------- -------- --------- -----
Revenue $122,861 $202,014 $183,311 $- $508,186
======== ======== ======== === ========
Gross margin $30,741 $91,155 $69,182 $- $191,078
------- ------- ------- --- --------
Adjusted
EBITDA (1) $(5,284) $(253) $2,318 $(14,145) $(17,364)
Business
reorganization
and
integration
expenses 3,339 6,547 2,379 14 12,279
Goodwill and
other
impairment
charges (120) - 1,669 - 1,549
---- --- ----- --- -----
EBITDA (1) (8,503) (6,800) (1,730) (14,159) (31,192)
Depreciation
and
amortization 3,100 3,731 2,401 137 9,369
----- ----- ----- --- -----
Operating
(loss) income $(11,603) $(10,531) $(4,131) $(14,296) $(40,561)
========= ========= ======== ========= =========
For The Nine
Months Ended Hudson
September 30, Hudson Hudson Asia
2008 Americas Europe Pacific Corporate Total
--------- ------- -------- --------- -----
Revenue $221,254 $324,329 $319,815 $- $865,398
======== ======== ======== === ========
Gross margin $60,901 $170,603 $138,771 $- $370,275
------- -------- -------- --- --------
Adjusted
EBITDA (1) $4,544 $18,985 $22,413 $(21,145) $24,797
Business
reorganization
and
integration
expenses 1,826 1,229 1,978 - 5,033
Goodwill and
other
impairment
charges - - - - -
--- --- --- --- ---
EBITDA (1) 2,718 17,756 20,435 (21,145) 19,764
Depreciation
and
amortization 3,518 4,467 3,130 159 11,274
----- ----- ----- --- ------
Operating
(loss) income $(800) $13,289 $17,305 $(21,304) $8,490
====== ======= ======= ========= ======
(1) Non-GAAP earnings before interest, income taxes, special charges,
other non-operating expense, and depreciation and amortization
("Adjusted EBITDA") and non-GAAP earnings before interest, income
taxes, other non-operating expense, 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. Adjusted EBITDA and 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, adjusted EBITDA and EBITDA as presented
above may not be comparable with similarly titled measures reported
by other companies.
Contact: David F. Kirby
Hudson Highland Group
+1-212-351-7216
david.kirby@hudson.com
David F. Kirby of Hudson Highland Group, +1-212-351-7216, david.kirby@hudson.com
Copyright (C) 2009 PR Newswire Europe. All rights reserved
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Company: Hudson Highland Group Inc (HHGP)
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